Which of the following is a key assumption of the supply and demand model?
A) that the price and quantity sold are determined in a single market
B) that the prices and quantities sold are simultaneously determined in all markets
C) the way the whole economy achieves equilibrium
D) that international markets affect domestic markets, which in turn affect local markets

Question

Quizplus · Accepted Answer

The supply and demand model assumes that the price and quantity sold are determined in a single market, where suppliers offer a certain quantity of a product at a certain price, and consumers demand a certain quantity at a certain price. This is the basic building block of the model, and it is based on the assumption that buyers and sellers interact in a competitive market, where no one can influence the price or quantity sold.

Which of the Following Is a Key Assumption of the Supply