Market failure implies that
A) in the real word, the market fails to achieve equilibrium
B) with an unequal distribution of income, the market will fail to provide sufficient goods to the poor
C) when externalities are present, the market will fail to provide the socially optimal price and output
D) negative externalities are greater than positive externalities so that the market fails to create an efficient outcome
E) the inability of the market to solve the problem of unnecessary demand is caused by persuasive advertising

Question

Quizplus · Accepted Answer

Market failure occurs when externalities, such as pollution, are present, leading to a divergence between private and social costs or benefits, resulting in non-optimal market outcomes.

Market Failure Implies That