Question

How does the market determine the price and the quantities supplied and demanded? A. A market price is established by a government agency and both suppliers and consumers have to accept it. B. All of the suppliers get together and determine the price and the quantities that each business will produce. C. Competition among suppliers and consumers eventually brings the market to an equilibrium price. D. A meeting of consumers establishes a price, then businesses produce whatever quantities they think will give them a profit.

Answer 1

In a market economy, the price and the quantities of the goods are indirectly determined by the demand and supply: there is a competition among the suppliers, which is however constrained by their production costs, and the consumers choose the best options: the interplay of these two factors causes the prices to meet "in the middle", creating an equilibrium.

In other words, the answer is C