Q58
Price of a product is determined in a free market by
A.
Demand for the product
B.
Supply of the product
C.
Both demand and supply
AnswerD.
The government
Answer: Option C
Solution
Answer: Option C
Solution:
Price of a product is determined in a free market by both demand and supply. In microeconomics, supply and demand is an economic model of price determination in a market. It postulates that, holding all else equal, in a competitive market, the unit price for a particular good, or other traded item such as labor or liquid financial assets, will vary until it settles at a point where the quantity demanded (at the current price) will equal the quantity supplied (at the current price), resulting in an economic equilibrium for price and quantity transacted.