What can be inferred about the relationship between market supply and demand and stock prices?

The assertion that both supply and demand are integral to setting the market price is grounded in fundamental economic principles. The relationship between market supply and demand dictates how prices are established in a competitive market. When demand for a product or asset increases while supply remains constant, prices tend to rise because more buyers are competing for the same quantity of goods. Conversely, if supply increases and demand remains unchanged, prices are likely to fall as there are more goods available than buyers willing to purchase them.

This interplay illustrates that neither supply nor demand operates in isolation; rather, both factors must be considered to understand pricing behavior in the market effectively. The balance of supply and demand determines the equilibrium price, where the quantity demanded by consumers matches the quantity supplied by producers. Hence, acknowledging that both aspects are crucial for price determination accurately captures the dynamics of market pricing.

In contrast, the other choices misrepresent the relationship between supply, demand, and prices, failing to recognize the interplay that defines market equilibrium.