Chapter 2, Problem 4AA

To determine

To analyze the option best suited for the blank.

Explanation of Solution

A market economy operates through the market forces of demand and supply. These keep on fluctuating in the market.

The market demand of a product decreases as its price increases and the demand increases when its price decreases. Contrarily, the supply in the market increases on increasing the prices and the supply decreases as the price decreases.

It shows that the price is inversely proportionate to the demand and directly proportionate to the supply of the own good.

A market economy experiences continual changes as market forces influence the factors of production.