A market is defined as:

• A. a physical location where only goods are produced
• B. a method for producers to set production quotas
• C. a government agency that regulates prices
• D. a place or system where buyers and sellers interact to exchange goods and services

Answer: (D)

Verified step by step guidance

1. Understand the definition of a market in microeconomics: it is a place or system where buyers and sellers interact to exchange goods and services.
2. Recognize that a market is not limited to a physical location; it can also be virtual or conceptual, such as online platforms or auction systems.
3. Identify that a market involves the interaction of demand (buyers) and supply (sellers), which determines prices and quantities exchanged.
4. Note that a market is distinct from a government agency or a method for setting production quotas, as those are regulatory or organizational concepts, not the market itself.
5. Summarize that the correct definition of a market is the environment or mechanism where voluntary exchange of goods and services occurs between buyers and sellers.