Final answer:
Supply and demand determine product prices by striking a balance where the amount consumers are willing to buy meets the amount sellers are willing to offer. This balance is reflected in market prices, which fluctuate based on these economic forces and competition among businesses.
Step-by-step explanation:
Supply and demand are fundamental economic principles that determine the price of a product. When the demand for a product exceeds the available supply, prices are likely to rise. Conversely, when there is more supply than demand for a product, prices tend to fall. This interaction creates a market equilibrium where the product's price balances the quantity supplied and demanded. The correct answer to how supply and demand help determine the price of a product is D. By creating a balance between buyers who want low prices and sellers who want high prices.
It's important to note that sellers aim to maximize profits, which can sometimes lead to higher prices. However, as consumers accept or reject these prices, demand can increase or decrease, influencing market prices accordingly. Moreover, competition among businesses for the same consumer base can also lead to better prices and quality of products due to the desire to attract and retain customers.
Understanding these market forces is crucial for both consumers and producers. Consumers seek the best value for their money, and producers aim for profitable sales. The dynamics of supply, demand, and competition continually shape the pricing strategies and economic viability of products within the marketplace.