The Price of a Good or a Service Can Be

question 110

Multiple Choice

The price of a good or a service can be determined by free interaction of demand and supply or by a government price regulation. One important difference between these two price- determining methods is

• A) that a regulated price above the equilibrium price will always result in shortages.
• B) there are no shortages or surpluses at the free- market equilibrium price.
• C) one is capitalist and the other is communist.
• D) regulated prices are fairer since more people can then afford the goods or services.
• E) the government is in the best position to know the needs of the people.

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Definitions:

Gnome Molds

Tools or containers used to shape garden gnome statues during their production process.

Plaster

A mixture of water, lime, or gypsum, sand, and possibly other materials, used in construction and repair of buildings for coatings, molding, or casting surfaces.

Labor

The human effort, both physical and mental, used in the creation of goods and services.

Positive Supply

A situation in which the quantity of goods or services offered for sale increases as the price increases, adhering to the law of supply.