Which of the following statements is (are) TRUE about market failures? I. Property rights are clearly defined.
II) Information is available to all decision makers.
III) External costs are not considered in production decisions by producers.
A) I
B) I and II
C) III
D) I, II, and III
Answer Key

Question

Quizplus · Accepted Answer

Market failures occur when the free market fails to allocate resources efficiently. One common type of market failure occurs when external costs (or benefits) are not considered in production decisions. This means that producers may not take into account the negative impact of their production on third parties or the environment. Property rights and information asymmetry can also contribute to market failures, but these factors are not directly related to the specific type of market failure described in the question. Therefore, only statement III is true.

Which of the Following Statements Is (Are) TRUE About Market