Final answer:
Markets achieve fairness and effectiveness in reaching equilibrium through the forces of supply and demand, provided the conditions of pure competition and lack of externalities. This results in an equilibrium price where resources are allocated efficiently.
Step-by-step explanation:
Markets are deemed fair and effective in reaching equilibrium as they are driven by the forces of supply and demand. In an ideal pure competition scenario, numerous producers supply identical products, contributing to very few barriers to market entry. This setup encourages efficient price-setting mechanisms that naturally balance out the quantities supplied and demanded, resulting in an equilibrium price. When this occurs, the market efficiently allocates resources, under the assumption that all market participants have equal access to information and operate without coercion.
From the perspective of economic theory, a market achieves fair market value when a transaction occurs between knowledgeable and willing parties, neither of whom are under any compulsion to act. This mirrors the 'arm's-length transaction' concept which helps maintain objectivity in valuation. Market heterogeneity and externalities might complicate this simplicity, but these elements still demonstrate how markets fundamentally strive towards an equilibrium which reflects true economic valuation and resource distribution.