Market failure

Question

Market failure

Quizplus · Accepted Answer

Market failure can occur when the market's allocation of resources is not efficient, leading to an inequality in the distribution of goods and services. Externalities, such as pollution, can contribute to market failure as they affect individuals or entities that were not involved in the original transaction. Market failure is not limited to the United States and can occur in any type of economic system. A good having a price of zero would not necessarily lead to market failure, but would instead be an example of a public good.

Market Failure