Which of the following can prevent markets from reaching the efficient level of production?
I. A monopoly
II. Taxes
III. The product is a public good
A) I and II
B) II
C) II and III
D) I, II and III

Question

Quizplus · Accepted Answer

All three options can prevent markets from reaching the efficient level of production. A monopoly can limit output to raise prices, taxes can distort prices and quantities traded, and public goods can lead to underproduction since they are non-excludable and non-rivalrous, leading to free-rider problems.

Which of the Following Can Prevent Markets from Reaching the Efficient