Market failure occurs when
A) markets have perfect information.
B) markets do not produce the most efficient outcome.
C) companies merge to increase efficiency.
D) companies are too efficient.

Question

Quizplus · Accepted Answer

Market failure occurs when the market fails to allocate resources efficiently, resulting in a suboptimal outcome. This may be due to externalities, information asymmetry, public goods, or market power. In such situations, the government may need to intervene to correct the inefficiency. Options A, C, and D do not accurately describe market failure.

Market Failure Occurs When