Trivia: What is a popular method of price determination in market economies?
Supply and demand
Government subsidy
Interest influence
Price shock
The correct answer is Supply and demand
So why is this answer correct? : Supply and demand is an economic theory first proposed by Adam Smith in the 18th century. The core concept is that the influence of demand affects the supply of a product — as the demand for a product rises, the market increases its supply to meet that new demand, and vice versa. When the supply outstrips demand, prices fall until the two factors reach what is known as an “equilibrium price.”