Which is a source of market failure?
A)Market power
B)Externalities
C)Irrationality
D)These are all sources of market failure.

Question

Quizplus · Accepted Answer

All three options (market power, externalities, and irrationality) are sources of market failure. 
- Market power occurs when a single entity or a group of entities have the ability to influence prices and restrict output. This can lead to suboptimal allocation of resources and reduced welfare for consumers.
- Externalities occur when the actions of one economic agent affect the welfare of another agent without being reflected in market prices. For example, pollution is a negative externality that can harm the health of people and the environment.
- Irrational behavior by economic agents can also lead to market failure, as it can result in suboptimal decision-making and resource allocation. For instance, individuals may make choices that are not in their long-term interests, such as smoking or overeating.

Which Is a Source of Market Failure