When markets don't achieve efficiency:
A)they must achieve equity.
B)the government must be participating in the market.
C)the government may intervene to improve society's welfare.
D)they should be closed.

Question

Quizplus · Accepted Answer

When markets don't achieve efficiency, it can lead to market failures such as externalities, public goods, and monopolies. In such cases, the government may intervene to improve society's welfare by implementing policies such as taxes, subsidies, regulations, and public provision of goods and services. This is necessary because an inefficient market may not distribute goods and services fairly, causing social welfare to decrease. Thus, government intervention is required to ensure an efficient and equitable allocation of resources. Choices A, B, and D are incorrect because achieving equity is not the only goal of government intervention, the government may not always be participating in the market, and closing the market is not a feasible solution.

When Markets Don't Achieve Efficiency