In order to understand how the price of a good is determined in the market,one must account for the desires of
A) consumers exclusively.
B) firms exclusively.
C) governmental agencies exclusively.
D) lobbyists exclusively.
E) both consumers and firms.

Question

Quizplus · Accepted Answer

The price of a good is determined by the interaction between consumers and firms. Consumers demand goods and firms supply them. The interaction between supply and demand determines the price of the good. Therefore, both consumers and firms' desires must be accounted for to understand how the price of a good is determined in the market. Governmental agencies and lobbyists may affect the market but do not determine the price of the good.

In Order to Understand How the Price of a Good