35.In perfect competition how the prices of goods and services are decided? A. Demand and supply forces decide the prices of goods and services. B. The seller decides the prices of goods. C. Government influences the prices of goods. D. Buyers control the price level by influencing demand for the products.
Question
35.In perfect competition how the prices of goods and services are decided? A. Demand and supply forces decide the prices of goods and services. B. The seller decides the prices of goods. C. Government influences the prices of goods. D. Buyers control the price level by influencing demand for the products.
Solution
The correct answer is A. Demand and supply forces decide the prices of goods and services. In a perfect competition market structure, prices are determined by the equilibrium between the forces of demand and supply. This means that the price of a good or service adjusts to the point where the quantity demanded by consumers equals the quantity supplied by producers. This is also known as the market-clearing price. Neither the seller (option B), the government (option C), nor the buyers (option D) individually control the price level in a perfect competition scenario.
Similar Questions
Which statement best summarizes the role of supply and demand in setting prices for goods?A.Prices are set by finding a balance between the high prices sellers prefer and the low prices buyers prefer.B.Prices are set by sellers creating a large supply of a product and then determining how much demand exists.C.Prices are set by identifying the demand for a product at a certain price and convincing buyers to pay a little more.D.Prices are set by adding up the total supply and demand of a product and converting it to a dollar amount.
In a competitive market,a.only a few sellers sell the same product.b.if one buyer chooses to purchase a large quantity of the product, the price will rise.c.if one seller withholds his product from the market, prices will rise.d.each seller has limited control over the price of his product.
The interaction of supply and demand explains:A Both the prices and the quantities of goods and servicesB The quantities of goods and services but not their pricesC The prices of goods and services but not their quantitiesD Neither the prices nor the quantities of goods and services
Competition fosters efficiency and low prices becauseMultiple Choicebuyers will have a limited choice of goods and services.the government regulates the prices of goods and services.a decreased supply of goods and services depresses prices.producers have to offer the best products at the most reasonable price.
How is an equilibrium price determined?A.By finding the price where quantity supplied matches quantity demandedB.By finding a price that meets the highest quantity demanded by consumersC.By finding a price that meets the highest quantity supplied by producersD.By finding a price that exceeds the expenses producers take on to create supply
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