Which of the following statements is true of markets?

• A. Markets only exist in physical locations.
• B. Markets eliminate the need for prices.
• C. Markets always guarantee equal outcomes for all participants.
• D. Markets facilitate the exchange of goods and services between buyers and sellers.

Answer: (D)

Verified step by step guidance

1. Understand the definition of a market in microeconomics: a market is any arrangement or mechanism that allows buyers and sellers to exchange goods and services.
2. Recognize that markets are not limited to physical locations; they can be virtual or conceptual spaces where transactions occur.
3. Recall that markets rely on prices as signals to coordinate the exchange of goods and services, so they do not eliminate the need for prices.
4. Know that markets do not guarantee equal outcomes for all participants because outcomes depend on factors like supply, demand, bargaining power, and preferences.
5. Conclude that the true statement is that markets facilitate the exchange of goods and services between buyers and sellers, which is the fundamental role of markets.