Asked by Joshua Rieser on May 09, 2024
Verified
Suppose purchases do not occur because the value of the good to the potential seller exceeds the value to a potential consumer.This situation will occur in:
A) a market dominated by government regulation.
B) well-functioning markets.
C) a market made up of many buyers and sellers.
D) a centralized market system.
Market System
An economic system where decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.
Government Regulation
Laws and rules set by the government to control the way businesses and industries operate, with the aim of protecting public interest.
- Acquire knowledge on the principle of mutually advantageous exchanges as it pertains to market effectiveness.
- Comprehend the importance of well-defined property rights in facilitating market transactions.
Verified Answer
NK
Nadiah KamalMay 10, 2024
Final Answer :
B
Explanation :
In a well-functioning market, the prices of goods are determined by the forces of supply and demand. If a seller values their good higher than a potential buyer, they would offer it at a price that reflects their valuation. If there are no buyers willing to pay that price, the seller would either have to lower their price or hold onto the good. Therefore, in a well-functioning market, purchases do not occur only if the price is too high for potential buyers, not because of government regulation or a centralized market system.
Learning Objectives
- Acquire knowledge on the principle of mutually advantageous exchanges as it pertains to market effectiveness.
- Comprehend the importance of well-defined property rights in facilitating market transactions.