A market where firms can choose where to locate production and workers can choose where to work is called?

Labour Market.

The correct answer is Option (2) → Labour Market.

A labour market is a market where:

• Firms choose where to locate production (to attract the right workers or minimize costs)

• Workers choose where to work (based on wages, job conditions, and location)

It is the place where labour (workforce) is bought and sold, and where employment and wage levels are determined.