Market failure exists whenever

Question

Quizplus · Accepted Answer

Market failure occurs when the market fails to allocate resources in a Pareto efficient way, leading to a suboptimal outcome. This could arise due to externalities, public goods, information asymmetries, market power, or other reasons. Income distribution may be unequal, but it is not necessarily a defining characteristic of market failure. Government intervention may be a solution to market failure, but it could also aggravate the problem, depending on the nature and efficacy of the intervention.

Market Failure Exists Whenever