Market failure occurs when
A) firms that are incurring losses leave a market.
B) perfectly competitive firms produce where MR = MC.
C) resources are misallocated, or allocated inefficiently.
D) firms are only able to earn a normal profit.

Question

Quizplus · Accepted Answer

Market failure is defined as a situation where resources are not allocated efficiently, leading to a net loss of economic value. This can happen due to various reasons such as externalities, public goods, or information asymmetries.

Market Failure Occurs When