Final answer:
The statement that market orders entail greater price uncertainty than limit orders is true; market orders have no price guarantee leading to uncertainty, while limit orders set a specific price range but might not be executed.
Step-by-step explanation:
Market orders entail greater price uncertainty than limit orders is a true statement. Market orders are executed immediately at the best available current price, without any price guarantee, leading to uncertainty about the final price at which the trade will be executed. In contrast, limit orders specify the maximum or minimum price at which you are willing to buy or sell, providing control over the price, but not guaranteeing that the order will be executed if the market does not reach the limit price.
In markets, many make economic transactions in a situation of imperfect information, where either the buyer, the seller, or both are uncertain about the qualities of what they are buying and selling. Price uncertainty contributes to the imperfect information where a market may be difficult to exist. This scenario often occurs when trading stocks, as the market conditions can fluctuate causing variations in prices.