A free market achieves an equilibrium price and quantity due to:
A) the combined actions of buyers and sellers.
B) increased competition among sellers.
C) government regulations placed on market participants.
D) buyers' ability to affect market outcomes.

Question

Quizplus · Accepted Answer

A free market achieves an equilibrium price and quantity due to the combined actions of buyers and sellers. Buyers make decisions based on their willingness and ability to pay, while sellers make decisions based on their costs of production and desired profits. Through these interactions, the market finds a price at which the quantity demanded by buyers equals the quantity supplied by sellers, resulting in an equilibrium point. Increased competition among sellers and buyers' ability to affect market outcomes are factors that influence the equilibrium point, but they are not the sole reasons for achieving it. Government regulations placed on market participants may affect prices and quantities but can also distort the market's natural equilibrium.

A Free Market Achieves an Equilibrium Price and Quantity Due