Market failures ________ and generate ________.

Question

Quizplus · Accepted Answer

Market failures occur when the free market fails to allocate resources efficiently, which results in reducing economic efficiency and generating deadweight loss. Externalities and monopolies/oligopolies are types of market failures, but they do not necessarily always occur and are not the central consequence of market failure. Compelling the government to act and regulations are potential solutions to market failures, but they are not the consequences of the market failure itself.

Market Failures ________ and Generate ________

Market Failures and Generate