What does the term "market failure" refer to?
A) a situation in which the market on its own fails to allocate resources efficiently
B) an unsuccessful advertising campaign that reduces consumer demand
C) a situation in which competition among firms leads to bankruptcies
D) a firm that is forced out of business because of new by-laws

Question

Quizplus · Accepted Answer

Market failure refers to a situation where the market fails to allocate resources efficiently due to various factors such as externalities, public goods, imperfect competition, and information asymmetry. This results in inefficiency and an inefficient allocation of resources.

What Does the Term "Market Failure" Refer To