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) that a regulated price above the equilibrium price will always result in shortages.
B) there are no shortages or surpluses at the free- market equilibrium price.
C) one is capitalist and the other is communist.
D) regulated prices are fairer since more people can then afford the goods or services.
E) the government is in the best position to know the needs of the people.

Question

Quizplus · Accepted Answer

At the free-market equilibrium price, the quantity demanded will be equal to the quantity supplied, resulting in no shortages or surpluses. In contrast, a regulated price above the equilibrium price can lead to shortages, as suppliers will not be willing to supply as much quantity as demanded by consumers. The other options are not correct as they either present inaccurate statements or personal opinions.

The Price of a Good or a Service Can Be