Consumers and produces make their choices based on the market forces o...
Consumers and producers make their choices based on the market forces of demand and supply in Capitalist economy. Capitalist economy is also called the market economy in which the prices are determined by the free interaction of the forces of demand and supply. It is an automatic self-regulating mechanism which runs with the motive of profit.
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Consumers and produces make their choices based on the market forces o...
Order to maximize their utility or profits. Demand refers to the quantity of a good or service that consumers are willing and able to buy at a given price, while supply refers to the quantity of a good or service that producers are willing and able to sell at a given price.
Consumers make their choices based on the market forces of demand and supply by considering factors such as price, quality, and availability of the product or service. If the price of a good or service is too high, consumers may choose to buy less or look for alternative options. On the other hand, if the price is low, consumers may choose to buy more or even stock up on the product.
Producers, on the other hand, make their choices based on the market forces of demand and supply by considering factors such as production costs, profitability, and market demand. If the demand for a product or service is high, producers may choose to increase their production to meet the demand and maximize their profits. If the demand is low, producers may choose to reduce their production or even stop producing the product altogether.
In a competitive market, the interaction of demand and supply forces determines the equilibrium price and quantity of a good or service. The equilibrium price is the price at which the quantity demanded equals the quantity supplied. At this price, there is no shortage or surplus of the product, and both consumers and producers are satisfied.
Overall, consumers and producers rely on the market forces of demand and supply to guide their choices and actions in order to optimize their own utility or profits.
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