The term market failure refers to
A) a market that fails to allocate resources efficiently.
B) an unsuccessful advertising campaign which reduces demand.
C) ruthless competition among firms.
D) a firm that is forced out of business because of losses.s

Question

Quizplus · Accepted Answer

Market failure occurs when the market mechanism fails to allocate resources efficiently, leading to an inefficient allocation of resources in the economy. This can happen due to a variety of reasons, including externalities, public goods, and imperfect competition. Market failure is considered an example of market inefficiency. The other options do not accurately describe market failure.

The Term Market Failure Refers to