How do the concepts of market failure and failure of market outcome relate to the concept of economic efficiency?
A) Market failure means the economy is not economically efficient; failure of market outcome could happen even if the economy is economically efficient.
B) Failure of market outcome means the economy is not economically efficient; market failure could happen even if the economy is economically efficient.
C) Both market failure and failure of market outcome mean that the economy is not economically efficient.
D) Both market failure and failure of market outcome could happen even if the economy is economically efficient.

Question

Quizplus · Accepted Answer

Market failure occurs when the market fails to allocate resources efficiently, leading to an economically inefficient outcome. Failure of market outcome can occur even when the market is functioning efficiently, due to factors such as externalities or imperfect information.

How Do the Concepts of Market Failure and Failure of Market