Question

In a market economy, supply and demand are important because they are direct policy tools used by government agencies to regulate the economy. illustrate when an market is in equilibrium, but they are not helpful when a market is out of equilibrium. can be used to predict the impact on the economy of various events and policies. All of the above are correct.

Answer 1

can be used to predict the impact on the economy of various events and policies.

Step-by-step explanation:

Market demand curve can be determined by the horizontal summation of the various quantities for which, each buyer or consumer in a market is willing to pay for at different prices.

A market demand curve is used to graphically represent the quantity of goods demanded by all the buyers or consumers at different price points. Thus, the market demand curve is downward sloping due to the fact that as the price of a product increases, the quantity demanded by the consumer decreases.

Demand and supply forms the core of market forces that determines prices and quantity.

In a market economy, supply and demand are important because they can be used to predict the impact on the economy of various events and policies.