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A free market is best described as a market in which:
AThe government fixes every selling price by statute
BOnly a single seller controls the entire output
CDemand and supply forces operate without outside intervention
DBuyers and sellers must accept administered tariffs
Answer & Solution
Correct answer: C. Demand and supply forces operate without outside intervention
1. A free market lets the forces of demand and supply take their own course.
2. There is no intervention by government or any other entity.
3. Hence option C captures this definition; price is set by interaction of the two forces.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 4 Unit II "Determination of Prices", p.1_
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