Which of the following terms describes the situation in which too few or too many resources go to a specific economic activity because of external benefits or costs?
A) an technologically inefficient market
B) a market failure
C) a laissez-faire market
D) an external market

Question

Quizplus · Accepted Answer

A market failure occurs when the market does not allocate resources efficiently due to externalities such as external benefits or costs. This leads to an inefficient allocation of resources, either too much or too little being allocated to the economic activity in question. Technological inefficiency refers only to a lack of productivity gains in the production process, while laissez-faire refers to minimal government intervention in the market. An external market is not a commonly used term in economics.

Which of the Following Terms Describes the Situation in Which