The correct answer is:
Supply and demand coordinate to determine prices by working competitively.
Explanation:
1. In a market economy, prices are determined by the interaction of supply and demand.
2. Supply refers to the quantity of a good or service that producers are willing to offer for sale at a given price.
3. Demand refers to the quantity of a good or service that consumers are willing to buy at a given price.
4. When supply is high and demand is low, prices tend to decrease as producers compete to sell their goods.
5. Conversely, when demand is high and supply is low, prices tend to increase as consumers compete to purchase the limited goods available.
6. This competitive interplay between supply and demand helps establish equilibrium prices in the market, where the quantity supplied equals the quantity demanded.
7. Therefore, supply and demand work competitively to determine prices in the market economy.
