Market failure is a situation in which
A) production generates costs that are not paid for by the producer.
B) a market is not in equilibrium.
C) purchasers cannot afford the goods that they need.
D) the government intervenes in the market.

Question

Quizplus · Accepted Answer

Market failure occurs when the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss. One common example is when production generates external costs (negative externalities) that are not borne by the producer, such as pollution.

Market Failure Is a Situation in Which