In the case of market failure:

Question

Quizplus · Accepted Answer

In the case of market failure, government intervention provides superior outcomes. Market failure occurs when markets fail to allocate resources efficiently, resulting in a loss of economic and social welfare. It can arise due to externalities, public goods, information asymmetry, or market power. In such cases, government intervention can correct market failures and improve outcomes by providing public goods, regulating externalities, promoting competition, or correcting information asymmetry. Socialism and free markets are not relevant to market failure since they do not address the root causes of market failure. Firm owners may face losses, but the goal of government intervention is to promote overall economic and social welfare, not to protect individual firms.

In the Case of Market Failure