Demand and Supply Set Market Prices

Steps:

• Identify the core function of demand and supply in a free market: they interact to determine equilibrium.
• Recall that demand represents buyers' willingness to pay, while supply shows sellers' willingness to offer goods.
• Understand that the market price balances these forces at the intersection point.
• Evaluate choices: only one directly addresses price-setting without assuming equality or universal benefits.

Why C is correct:

• In free markets, the law of supply and demand states that price equilibrates where quantity demanded equals quantity supplied, making both factors essential for price determination.

Why the others are wrong:

• A: Demand and supply allocate efficiently but not necessarily to "greatest needs," which implies subjective priorities.
• B: Free markets do not guarantee equal distribution; outcomes depend on purchasing power.
• D: Not everyone benefits equally, as access varies by income and availability.

Final answer: C