The price of a good or a service can be determined by free interaction of demand and supply or by a government price regulation.One important difference between these two price- determining methods is
A)one is capitalist and the other is communist.
B)there are no shortages or surpluses at the free- market equilibrium price.
C)the government is in the best position to know the needs of the people.
D)that a regulated price above the equilibrium price will always result in shortages.
E)regulated prices are fairer since more people can then afford the goods or services.

Question

Quizplus · Accepted Answer

The key difference between the free market price and government price regulation is that in a free market, the price is determined by the interaction of demand and supply, and at the equilibrium price, there are no shortages or surpluses. On the other hand, with government price regulation, the price is set by the government, and this may result in shortages or surpluses if it is not set correctly. Hence, B is the correct choice as it highlights this difference.

The Price of a Good or a Service Can Be