The theory that, in a free market economy prices are determined by the interaction of supply and demand. True False

The statement is describing the basic principle of a free market economy, which is that prices are determined by the interaction of supply and demand. In a free market, the laws of supply and demand are free from any intervention by a government, a price-setting monopoly, or other authority. It is the invisible hand of the market that determines the prices of goods and services. Therefore, the statement is true.