Question

In a capitalistic economy, the prices are determined by ______.

• A. demand and supply
• B. government authorities
• C. buyers in the market
• D. sellers in the market

Answer 1

Answer: (A)

demand and supply

Laissez-faire principles or less to no government intervention is followed under the capitalistic economy. Due to this the prices are decided by the demand and supply forces. If there are large number of buyers of a commodity it's demand goes up, producers also increase the supply and prices of this go up. On the other hand if a commodity is available in large proportion when it's supply increase the prices go down.