Demand and _______ are the forces that make market economies work.
Options
AElasticity of demand
BQuantity demanded
CSupply
DQuantity supplied
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Introduction to Business EconomicsMTP Jun 22Question 670 of 209
All Questions Correct Answer
✅ Option c — Supply
All Options:
- AElasticity of demand
- BQuantity demanded
- CSupply
- DQuantity supplied
Detailed Solution & Explanation
• The question asks for the fundamental forces that drive market economies. In economics, a market is defined by the interaction of buyers and sellers.
• Buyers express their willingness and ability to purchase goods and services through demand. Sellers express their willingness and ability to offer goods and services through supply.
• The interplay between demand and supply determines prices and quantities of goods and services exchanged in a market. This is the core principle of how market economies allocate resources.
• Therefore, "Supply" is the correct answer because it represents the other half of the fundamental economic forces that, along with demand, make market economies function. This concept is central to the Law of Supply and Demand.
• Option (A) "Elasticity of demand" is incorrect because it describes the responsiveness of demand to changes in price, not a fundamental force itself. While important, it's a characteristic of demand, not a separate driving force.
• Option (B) "Quantity demanded" is incorrect because it refers to a specific amount consumers are willing to buy at a particular price, which is a point on the demand curve, not the entire concept of demand or the opposing market force.
About This Chapter: Introduction to Business Economics
Paper
Paper 4: Business Economics
Weightage
5%
Key Topics
Meaning, Scope, Price Mechanism
This chapter lays the groundwork for understanding Business Economics as a discipline. It covers the meaning, scope, and nature of economics — including key distinctions like Microeconomics vs Macroeconomics, Positive vs Normative economics, and the fundamental economic problem of scarcity. Students learn how businesses use economic principles for decision-making in a competitive marketplace.
View Official ICAI SyllabusExam Strategy Tip
Focus on definitions and distinctions between concepts. Questions often test whether you understand the difference between Micro and Macro, or Positive and Normative statements.
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