In a perfect competitive market, price determines _________.
A
what to buy
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B
what to produce
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C
both (A) and (B)
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D
none of the above
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Solution
The correct option is D both (A) and (B) In a perfect competition market, price is determined by the combined forces of demand and supply. The equilibrium price then determines the decisions of what to buy for the consumers and what to produce/sell for the firms.