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CMA Foundation · Fundamentals of Business Economics and Management · Forms of Market

In economics, the term 'market' for a commodity most appropriately refers to which of the following?

A market in economics means the arrangement through which buyers and sellers of a commodity come into contact and trade at a common price. It need not be a physical place, since dealings can occur by phone or online, so the location-based definition is incorrect.

  1. AA specific building where goods are physically displayed and sold
  2. BThe arrangement in which buyers and sellers of a commodity are in contact and trade at a common priceCorrect
  3. COnly the wholesale trade of agricultural products
  4. DThe total production of a commodity in a country

Explanation

Economists define a market not by a place but by the interaction of buyers and sellers who deal in a commodity and arrive at one price. Hence a physical building is not essential, so option A is wrong. Wholesale-only and production-total definitions are too narrow or unrelated.

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