In a market system, how are the terms of exchange established?

A) Consumer advocacy groups establish fair prices for items, and most firms follow these pricing guidelines because they don't want to anger their consumers.

B) Industry associations establish an acceptable price range for each commodity sold within the industry, and member firms are obligated to abide by association guidelines.

C) The forces underlying supply and demand interact to determine a market clearing price.

D) Federal legislation establishes maximum prices for most goods, and state governments regulate the prices of any remaining items.

The forces underlying supply and demand interact to determine a market clearing price

Explanation:

Market is a place or system where person that are seller and buyer who come together for the purpose of sale and purchase the goods.

Types of market are:

Perfect Competition : It is a market in which there are number of sellers and number of buyers selling same commodities or homogeneous product.

Monopoly : It is a form of market in which there is single seller, he has full control over price.

Monopolistic Competition : It is a form of market in which there are number of sellers and number of buyers but all the sellers are selling different type of product.

Oligopoly : it is a form of market in which there are few big firms but a large number of buyers.

The market is also known as price system. The market system is very efficient. Market system creates a good competition.