4. In a market economy, supply and demand are important because they a. are direct policy tools used by government agencies to regulate the economy illustrate when an market is in equilibrium, but they are not helpful when a market is out of equilibrium. can be used to predict the impact on the economy of various events and policies. All of the above are correct. 5. In a market economy, a. supply determines demand and demand, in turn, determines prices. b. demand determines supply and supply, in turn, determines prices determine supply and the allocation of scarce resources determines prices and prices, in turn, supply and demand determine prices and prices, in turn, allocate the economy's scarce demand. resources.