Which of the following do economists use to classify markets?

• A. The amount of natural resources
• B. The level of government spending
• C. The rate of inflation
• D. The number of buyers and sellers

Answer: (D)

Verified step by step guidance

1. Understand that economists classify markets based on characteristics that affect how buyers and sellers interact.
2. Recognize that the amount of natural resources, the level of government spending, and the rate of inflation are macroeconomic factors, not direct market classification criteria.
3. Focus on market structure elements such as the number of buyers and sellers, product differentiation, and ease of entry and exit.
4. Identify that the number of buyers and sellers is a key factor because it influences market competition and pricing power.
5. Conclude that economists use the number of buyers and sellers to classify markets into types like perfect competition, monopoly, oligopoly, and monopolistic competition.