The phenomenon which occurs when markets do not produce the most efficient outcome on their own is known as
A) public goods.
B) imperfect information.
C) market failure.
D) economic certainty.

Question

Quizplus · Accepted Answer

Market failure is the term used when markets fail to allocate resources in a socially efficient way. This could occur due to externalities, public goods, imperfect competition, and asymmetric information, among other causes. The failure of markets to produce the most efficient outcome can lead to deadweight loss and inefficiencies, which often require government intervention to correct. The other options - public goods, imperfect information, and economic certainty - are not synonymous with market failure but instead are examples of specific causes of market failure.

The Phenomenon Which Occurs When Markets Do Not Produce the Most