The power of the supply and demand model lies in its ability
A) to generally predict how price and quantity will change with supply and demand shocks.
B) to precisely predict the impact of government regulations on quantity and price.
C) to precisely determine the difference between price ceilings and price floors.
D) to generally predict how profit motive impacts the distribution of goods and services.

Question

Quizplus · Accepted Answer

The supply and demand model is a useful tool for predicting how changes in supply and demand will affect the equilibrium price and quantity. While it cannot account for all factors that may impact the market, it can generally predict the impact of supply and demand shocks on price and quantity. The model does not specifically address government regulations, price ceilings, or profit motive.

The Power of the Supply and Demand Model Lies in Its