Question

in a market economy, prices are determined primarily by:
• Government Quotas
• Demand and Supply
• Political Leaders
Historical tradition

Answer 1

In a market economy, prices are primarily determined by **Demand and Supply**. This mechanism allows for the allocation of resources and goods based on consumer preferences and the availability of products. When demand for a good increases, prices tend to rise, and when supply increases, prices may fall, and vice versa. Government quotas, political leaders, and historical traditions may influence prices to some extent, but they do not play the central role that demand and supply do in a market economy.