The first step of the price-setting process is determining market equilibrium, and the last step is enforcing the chosen price policy. Which of the following best completes the statement: 'The first step of the price-setting process is ______, and the last step is ______.'?

• A. measuring deadweight loss; determining supply elasticity
• B. identifying market equilibrium; enforcing the price control
• C. analyzing black market activity; establishing demand curves
• D. setting a price ceiling; calculating consumer surplus

Answer: (B)

Verified step by step guidance

1. Understand that the price-setting process in microeconomics typically begins with identifying the market equilibrium, which is the point where quantity demanded equals quantity supplied.
2. Recognize that determining market equilibrium involves analyzing supply and demand curves to find the equilibrium price and quantity.
3. Know that after setting a price based on this equilibrium, the final step is to enforce the chosen price policy, such as implementing price controls or regulations.
4. Review the options given and match the first step with 'identifying market equilibrium' and the last step with 'enforcing the price control' because this sequence logically follows the price-setting process.
5. Conclude that the best completion of the statement is: 'The first step of the price-setting process is identifying market equilibrium, and the last step is enforcing the price control.'