Market failures
A) prevent the price system from attaining economic efficiency.
B) result in quantities and prices that are socially desirable.
C) strengthen economic efficiency by forcing unprofitable firms to close.
D) weaken the argument for government intervention in the economy.

Question

Quizplus · Accepted Answer

Market failures occur when the price system fails to allocate resources efficiently, resulting in a misallocation of resources. This means that the market outcome is not socially desirable, resulting in inefficiency. Therefore, market failures prevent the price system from attaining economic efficiency.

Market Failures