Final answer:
In a free enterprise economy, prices play a crucial role in allocating resources and coordinating the actions of buyers and sellers. Artificially changing prices can disrupt the functioning of the economy.
Step-by-step explanation:
In a free enterprise economy, prices play a crucial role in allocating resources and coordinating the actions of buyers and sellers. They act as signals, conveying information about supply and demand to both consumers and producers. When prices are allowed to fluctuate freely, they help to ensure that goods and services are allocated efficiently and fairly.
If prices are changed artificially, it can disrupt the functioning of the free enterprise economy. Artificial price changes can distort the signals that prices convey, leading to misallocation of resources. For example, if prices are set below the equilibrium level, it can create excess demand, leading to shortages and a lack of incentives for producers to supply the goods. On the other hand, if prices are set above the equilibrium level, it can create excess supply, leading to surpluses and wasted resources.