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CA Foundation · Business Economics · Price Determination in Different Markets

Which of the following is the basis on which economists classify a market as a 'market' in the economic sense?

In economics a market means buyers and sellers in contact with each other, directly or through communication, so that a single price tends to prevail for the commodity. It does not need a fixed physical place, cash payment or any government price control.

  1. AA fixed physical location where buyers and sellers meet
  2. BBuyers and sellers in contact with one another so that a single price tends to prevail for a commodityCorrect
  3. COnly the sale of goods against cash payment
  4. DGovernment regulation of the price of the commodity

Explanation

In economics a market is not tied to a place. It refers to the whole set of buyers and sellers who are in close enough contact, through any means, that one price tends to prevail for the commodity. A fixed location, cash-only sale or price regulation is not required.

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