Answer:
The statement concerning the trading city of Hangzhou that is most accurate according to the passage is:
D. Hangzhou was a vital trading city because it had foreign merchants and was also accessible by the Grand Canal for internal trade.
Explanation:
According to the passage, foreigners were not only welcome, but also a vital part of the markets in the city of Hangzhou. Therefore, we can easily eliminate letter A.
The passage mentions nothing about the government limiting the number of markets. Quite the opposite, it says there were 10 principal (main) markets, which makes us infer there were also other, smaller ones. Besides that, over 40,000 people frequented those markets. We can also eliminate letter B.
Letter C does not look incorrect. It is a fact that Europeans came to trade in cities in China. However, the passage says nothing about that specifically. Since the question asks us to take the passage into consideration, we should eliminate letter C as well.
We are left with letter D. If over 40,000 people frequented Hangzhou's markets, we can obviously assume it was a vital trading city. The passage makes it clear that foreign merchants could trade in the city, and that there was a canal. As we know, canals are supposed to make access to certain places easier. Therefore, letter D seems to be the best option.