Which statement(s)is/are TRUE about market failures? I.They arise when property rights are clearly defined.
II.They arise when information is available to all decision makers.
III.They arise when external costs are not considered in production decisions by producers.
A)I
B)I and II
C)III
D)I,II,and III

Question

Quizplus · Accepted Answer

Market failures arise when external costs are not considered in production decisions by producers. Therefore, statement III is true while statement I is false (as market failures can occur even with clearly defined property rights) and statement II is not relevant to the definition of market failures.

Which Statement(s)is/are TRUE About Market Failures? I