The type of good that is most likely to be subject to market failure is:
A) a public good.
B) a private good.
C) an uncommon resource.
D) a factor of production

Question

Quizplus · Accepted Answer

Market failure occurs when the market fails to allocate resources efficiently due to various reasons like externalities, asymmetric information, public goods, etc. Public goods have the characteristics of non-exclusivity and non-rivalry, due to which they cannot be provided efficiently by the market. Private firms would not provide public goods since they cannot exclude non-payers from using them. As a result, public goods are under-provided in the market, leading to a market failure. Hence, the type of good most likely to be subject to market failure is a public good.

The Type of Good That Is Most Likely to Be