There is no market failure if
A)the marginal private cost curve is upward sloping.
B)the demand curve (for a good or service)is downward sloping.
C)the demand curve lies about the marginal private cost curve.
D)marginal private costs are greater than the external costs associated with a negative externality.
E)the market provides the idea or socially optimal amount of a good.

Question

Quizplus · Accepted Answer

If the market provides the ideal or socially optimal amount of a good, then there is no market failure. This occurs when the marginal social benefit equals the marginal social cost, and all buyers and sellers have access to the same information and are able to make rational decisions. Therefore, the market equilibrium results in an efficient allocation of resources. None of the other options listed guarantee such an outcome.

There Is No Market Failure If