Question 13
Price DeterminationIn a free market system, trading can only take place when the
- A.market is not working efficiently
- B.equilibrium price is attained
- C.price of a commodity tends to attract consumers.
- D.consumer sovereignty is lacking.
Show the answer and explanation
Answer: B (equilibrium price is attained)
Explanation
In a free market, buyers and sellers settle at the equilibrium price, where the quantity they want to buy equals the quantity offered.