Economic activities in urban informality are typically characterized by:

The correct choice highlights that economic activities in urban informality are typically marked by unregulated markets and informal settlements. This reflects the reality that many informal economies operate outside the formal regulatory frameworks established by governments.

In informal urban settings, individuals and businesses often do not have access to official permits or licenses, leading to transactions that occur without oversight. This environment promotes flexibility and can provide livelihood opportunities for those who may not qualify for formal employment. Informal settlements—where people establish homes and businesses without official acknowledgement—are a direct result of rapid urbanization and the need for affordable housing and services.

Conversely, the other choices present characteristics that do not accurately describe the urban informal economy's nature. Strict government regulation, complete visibility to authorities, and high levels of taxation would typically apply to formal economic activities, where entities are legally established and answerable to tax and regulation authorities. In contrast, the informal economy often seeks to evade such structures, making unregulated markets and informal settlements the defining features.