Question

How do the market forces of supply and demand solve the three central
problems in a market economy?

Answer 1

Answer:

The demand for and supply of various goods determine the prices and quantities produced of various goods. ... This method of solving these central problems through market mechanism, that is, through forces of demand and supply is used by a free-enterprise capitalist economy.

Answer 2

• ᴛʜᴇ ᴅᴇᴍᴀɴᴅ ғᴏʀ ᴀɴᴅ sᴜᴘᴘʟʏ ᴏғ ᴠᴀʀɪᴏᴜs ɢᴏᴏᴅs ᴅᴇᴛᴇʀᴍɪɴᴇ ᴛʜᴇ ᴘʀɪᴄᴇs ᴀɴᴅ ǫᴜᴀɴᴛɪᴛɪᴇs ᴘʀᴏᴅᴜᴄᴇᴅ ᴏғ ᴠᴀʀɪᴏᴜs ɢᴏᴏᴅs.
• ᴛʜɪs ᴍᴇᴛʜᴏᴅ ᴏғ sᴏʟᴠɪɴɢ ᴛʜᴇsᴇ ᴄᴇɴᴛʀᴀʟ ᴘʀᴏʙʟᴇᴍs ᴛʜʀᴏᴜɢʜ ᴍᴀʀᴋᴇᴛ ᴍᴇᴄʜᴀɴɪsᴍ,
• ᴛʜᴀᴛ ɪs, ᴛʜʀᴏᴜɢʜ ғᴏʀᴄᴇs ᴏғ ᴅᴇᴍᴀɴᴅ ᴀɴd sᴜᴘᴘʟʏ ɪs ᴜsᴇᴅ ʙʏ ᴀ ғʀᴇᴇ-ᴇɴᴛᴇʀᴘʀɪsᴇ ᴄᴀᴘɪᴛᴀʟɪsᴛ ᴇᴄᴏɴᴏᴍʏ.