In a market economy, why can't producers charge really high prices for the goods and services they produce?
O
А.
Consumers will refuse to buy the goods and services at high prices.
В.
The high prices attract other sellers to enter the market and the competition lowers the prices.
The government does not allow producers to charge high prices for the goods and services they produce.
o
Producers fear the social unrest and protests that would occur if they charged high prices for the goods and services they produce.

Question

12-05-2021
Social Studies

contestada

In a market economy, why can't producers charge really high prices for the goods and services they produce?
O
А.
Consumers will refuse to buy the goods and services at high prices.
В.
The high prices attract other sellers to enter the market and the competition lowers the prices.
The government does not allow producers to charge high prices for the goods and services they produce.
o
Producers fear the social unrest and protests that would occur if they charged high prices for the goods and services they produce.

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Parrain Parrain · Answer 1 · 2021-05-17T14:39:55+02:00

Answer: В. The high prices attract other sellers to enter the market and the competition lowers the prices.

Explanation:

A market economy has many firms selling the same products. These firms will therefore have to reduce their prices in order to attract customers so that they can sell more than their competition.

It is for this reason that high prices do not exist in market economies. The only time prices are high is when a product is introduced for the first time. The firm will charge higher but when other firms see this, they will introduce similar products in order to benefit from this and in effect drive down the price.