Market failure describes a situation in which the market itself _______ in a way that balances social costs and benefits.
A) remains outside the transaction
B) incurs the costs outside the production process
C) fails to allocate resources efficiently
D) avoids externalities

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. This can happen due to reasons such as externalities, monopoly pricing, information asymmetries, and public goods, among others.

Market Failure Describes a Situation in Which the Market Itself