When markets fail,what can public policy do
A)nothing to improve the situation
B)potentially remedy the problem and increase economic efficiency
C)always remedy the problem and increase economic efficiency
D)in theory, remedy the problem, but in practice, has proven to be ineffective

Question

Quizplus · Accepted Answer

When markets fail, public policy can potentially remedy the problem and increase economic efficiency. Public policy interventions such as regulations, taxes, subsidies, and public goods provision can correct market failures such as externalities, market power, and information asymmetry, and improve economic outcomes. However, the effectiveness of public policy interventions depends on various factors such as the nature and severity of the market failure, the design and implementation of the policy, and the political and institutional context. Therefore, public policy cannot always remedy the problem and increase economic efficiency but can potentially do so, making option B the best answer.

When Markets Fail,what Can Public Policy Do