Supply and demand are dictated by ________.

Question

Quizplus · Accepted Answer

The price mechanism is what drives supply and demand. As prices increase, demand may decrease as people are less likely to purchase a product, while supply may increase as producers see an opportunity to earn more profit. If prices decrease, the opposite may happen with demand increasing and supply decreasing. The government, free enterprise, and management decisions can all have an effect on supply and demand, but ultimately it is the price mechanism that determines the equilibrium price and quantity.

Supply and Demand Are Dictated by ________