ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In a competitive market, sellers compete against other suppliers to sell their products and buyers bid against other buyers to obtain the product. This competition of sellers against sellers and buyers against buyers determines the price of the product. It’s called supply and demand.

Detailed explanation-2: -Healthy market competition is fundamental to a well-functioning U.S. economy. Basic economic theory demonstrates that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation.

Detailed explanation-3: -There are four primary approaches to regulating the overall price level1 – rate of return (or cost of service) regulation, price cap regulation, revenue cap regulation, and benchmarking (or yardstick regulation).

Detailed explanation-4: -What is price control in economics? Price controls are defined as the economic tool used by the government to restrict price changes of certain products and services. The government sets the minimum or maximum price of products and services directly in a free market.