Market failure is said to occur whenever
A) competitive markets do not allocate resources in the most economically desirable way.
B) prices rise.
C) some consumers who want a good do not obtain it because the price is higher than they are willing to pay.
D) government intervenes in the functioning of competitive markets.

Question

Quizplus · Accepted Answer

Market failure occurs when competitive markets do not allocate resources in the most economically desirable way. This means that the market is not operating efficiently and may be causing negative externalities, such as pollution or overuse of natural resources, or not providing public goods that are in the best interest of society. Prices rising or some consumers not obtaining a good they want are not necessarily indicators of market failure, as these may be a result of supply and demand forces. Government intervention may be necessary to correct market failures and ensure the best allocation of resources.

Market Failure Is Said to Occur Whenever