A market failure could be caused by
A) imperfect production.
B) many firms competing against each other for customers.
C) profit.
D) imperfect competition.

Question

Quizplus · Accepted Answer

Imperfect competition, such as a monopoly or oligopoly, can lead to market failure because the lack of competition allows the firm(s) to have too much control over prices and output, leading to inefficiency and potentially higher prices for consumers. Imperfect production (A) and profit (C) are not necessarily causes of market failure, while many firms competing against each other (B) can actually promote competition and efficiency, rather than causing market failure.

A Market Failure Could Be Caused by