Which of the following is an example of market failure?
A) Public goods.
B) Externalities.
C) Lack of competition.
D) all of these.

Question

Quizplus · Accepted Answer

Market failure refers to a situation in which the equilibrium in the market fails to allocate resources efficiently. Public goods are non-excludable and non-rivalrous, which creates the free-rider problem, and the market may not provide them in sufficient quantities. Externalities occur when the production or consumption of a good affects third parties who are not involved in the transaction, and the market may not account for these costs or benefits. Lack of competition may lead to market power and inefficient pricing and production decisions. All of these are examples of market failure.

Which of the Following Is an Example of Market Failure