13. In a market system, how are the terms of exchange established? a. Consumer advocacy groups establish fair prices for items, and most firms follow pricing guidelines because they don't want to anger their customers. b. Industry associations establish an acceptable price range for each commodity sold within the industry, and member firms are obligated to abide by these guidelines. c. The forces underlying supply and demand interact to determine the market price. d. Federal legislation establishes maximum prices for most goods, and state governments regulate the prices of any remaining items.

The persons involving in the activities of trading comprises the market system. It includes sellers, buyers and others involved in trading process. They also includes the buyers, consumers, producers who are the major players of the market system who determines the economic activity in it.

The supply and demand law is the major determinant of the production of goods and services in a market economy. The natural resources, land, capital and labor are the supplies. The purchasing power of the government, consumers and business are the demands. The forces underlying supply and demand interact to determine the market price.