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

The market for fresh fish in a coastal town is mostly local because fish is highly perishable and costly to transport over long distances, whereas the market for gold is nationwide or global. Which pair of factors best explains this difference in the extent of the market?

Gold has a wide market because it is durable, easily portable and has high value for its weight, while fresh fish is perishable and costly to carry far. These characteristics of the commodity, not the number of buyers, determine how far a market extends.

  1. APerishability and portability: gold has high value for its bulk and is durable, fish is notCorrect
  2. BBoth goods have the same durability, so only demand differs
  3. CGold has fewer buyers, which makes its market local
  4. DFish is a durable good with high value per unit weight

Explanation

The extent of a market widens for goods that are durable, portable, and of high value relative to bulk, with standardised quality. Gold meets all these, so it trades widely. Fish is perishable and costly to transport, confining its market locally. Options B, C and D state facts that are incorrect.

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