Ahualulco de Mercado is a city and municipality, in Jalisco in central-western Mexico. The municipality covers an area of 274 km. As of 20…Ahualulco de Mercado is a city and municipality, in Jalisco in central-western Mexico. The municipality covers an area of 274 km. As of 2005, the municipality had a total population of 21,465. Ahualulco comes from the Nahuatl word Ayahualolco which means "place of water crowned" or "place around the water."