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

Question

Quizplus · Accepted Answer

The free-market equilibrium price is the price at which demand and supply are equal, resulting in no shortages or surpluses, as both parties are satisfied with the price. In contrast, government regulation of prices can lead to shortages or surpluses if the regulated price is set above or below the equilibrium price. Thus, choice A accurately describes the difference between these two price-determining methods.

The Price of a Good or a Service Can Be