Final answer:
Classical economic theory holds that in a free market, willing sellers and informed buyers will settle on a fair price based on supply and demand. Option (A) is correct.
Step-by-step explanation:
Classical economic theory holds that in a free market, willing sellers and informed buyers will settle on a fair price based on supply and demand. Prices serve as a mechanism for collecting and transmitting information between buyers and sellers. Each consumer and producer reacts to changes in price based on their own preferences and profit-seeking behavior.
The market price is the current price at which an asset or service can be bought or sold. The market price of an asset or service is determined by the forces of supply and demand. The price at which quantity supplied equals quantity demanded is the market price.
The term market price refers to the amount of money for what an asset can be sold in a market. The market price of a given good is a point of convergence of the demand and supply for that good. It is an important aspect of calculating consumer surpluses, economic surpluses, etc.
To take a market price example, let's assume a stock has bid prices up to $24.99 and ask prices at $25.01 and above. When an investor places a market order to buy it will execute at $25.01. This becomes the market price and bids will need to move up to complete the next trade.