How do supply and demand affect prices in a market economy, and what factors can cause shifts in supply and demand curves?
Answer 1
Nicholas Warren
In a market economy, prices are determined by the interaction of supply and demand. When demand increases or supply decreases, prices tend to rise. Conversely, when demand decreases or supply increases, prices tend to fall. Factors that can cause shifts in supply and demand curves include changes in consumer preferences, income levels, production costs, technology, and government policies.
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