Two important causes of market failure are:
A)externalities and market power
B)externalities and increases in prices
C)market power and increases in poverty
D)increases in poverty and increases in prices

Question

Quizplus · Accepted Answer

Externalities and market power are widely recognized as two important causes of market failure. Externalities occur when the production or consumption of goods and services affect others who are not involved in the transaction. Market power refers to the ability of a single buyer or seller in the market to influence market outcomes, such as price and quantity. These two market failures can prevent markets from achieving efficiency, resulting in a misallocation of resources and welfare losses.

Two Important Causes of Market Failure Are