Final answer:
The correct answer is option d. A short position allows you to profit when market prices decline.
Step-by-step explanation:
The market position that allows you to profit when market prices increase but causes a loss when market prices decline is known as a short position.
When you have a short position, you are essentially betting that the price of a particular asset or security will decrease. You borrow the asset or security from someone else and sell it in the market, with the intention of buying it back at a lower price and returning it to the lender. If the price does decrease, you can buy it back at a lower price and make a profit.
For example, let's say you believe that the price of a stock will decline. You borrow the stock from someone who owns it and sell it in the market for $100. If the price of the stock does indeed decline to $80, you can buy it back at that lower price and return it to the lender. Your profit would be $20 ($100 - $80).
Therefore, the correct option is d. short position.