Which of the following dictates supply and demand in a market economy?

Question

Quizplus · Accepted Answer

Price mechanism dictates supply and demand in a market economy. It refers to how prices of goods and services provide signals to both producers and consumers in terms of what to produce and consume respectively. The higher the price, the more the producer is willing to produce to sell to the consumer, and vice versa. Privatization and production quotas may affect the availability of goods, but ultimately it is the price mechanism that determines the quantity and quality of goods produced and demanded in the market. Government intervention may also affect supply and demand, but in a market economy, the government's role is usually limited to regulating the market and ensuring fair competition.

Which of the Following Dictates Supply and Demand in a Market