In the price system
A) prices are set by government action.
B) consumers alone set the price.
C) producers alone set the price.
D) prices are set by the interaction of supply and demand.

Question

Quizplus · Accepted Answer

In the price system, prices are determined by the interaction of supply and demand. When there is a high demand for a product but a limited supply, prices will typically rise as suppliers can charge more. Conversely, when there is a surplus of a product and a low demand, prices will decrease as suppliers try to move more product. This market-based pricing system is predicated on the idea that consumers and producers will act rationally to maximize their own interests, leading to an equilibrium price that balances supply and demand.

In the Price System