ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Market prices are dependent upon the interaction of demand and supply. An equilibrium price is a balance of demand and supply factors. There is a tendency for prices to return to this equilibrium unless some characteristics of demand or supply change.

Detailed explanation-2: -The price of a commodity is determined by the interaction of supply and demand in a market. The resulting price is referred to as the equilibrium price and represents an agreement between producers and consumers of the good.

Detailed explanation-3: -A market economy is a type of economic system where supply and demand regulate the economy, rather than government intervention. A true free market economy is an economy in which all resources are owned by individuals.

Detailed explanation-4: -Alfred Marshall In 1890, Alfred Marshall’s Principles of Economics developed a supply-and-demand curve that is still used to demonstrate the point at which the market is in equilibrium.

Detailed explanation-5: -What is the price mechanism? The price mechanism is the means by which decisions of consumers and businesses interact to determine the allocation of resources. The free-market price mechanism clearly does NOT ensure an equitable distribution of resources and can lead to market failure.