The most elementary law of economic theory is the Law of Supply and Demand.
According to this law, in a market economy the interaction between supply and demand for a good is self-adjusting and the vector of adjustment is the price. This means that neither the consumer or the producer decides the price of the good.
When the supply of a good is scarce, the demand is oppressed and of course the price of the good goes up. When the supply is abundant, the demand for the good is satiated and the surplus of products for consumption causes the price to decrease.
Note that in both cases price is determined by the interaction of supply and demand. This is the natural law of economics! In this context, one can imagine that at some point the demand for a good may be equal to demand. This is the case where there will be an equilibrium price!
All this occurs without any governmental interference. If the Government intervene in the economy, the natural adjustment process will not happen. Market economies are characterized by free market, government is an agent that acts only to ensure the stability of the economic system through regulations, but does not directly intervene in economic activity.
Therefore, the second alternative is correct (B).
