Question

What is the main idea of Marshall’s scissors analogy in price determination?

Options

• Only demand determines price in the market

• Only supply determines price in the market

• Both demand and supply together determine price

• Price is independent of demand and supply

Answer 1

Both demand and supply together determine price

Explanation:

Marshall compared demand and supply to the two blades of a pair of scissors, showing that both are jointly responsible for determining the equilibrium price.