Which of the following is an example of a market failure?
A) There are not enough tickets available to concerts of extremely popular performers and artists.
B) The price of medical care has risen dramatically as a result of the introduction of sophisticated equipment and procedures.
C) Successful public schools provide benefits to the students who attend them, as well as to the community as a whole, including those who don't go to those public schools.
D) Sharply declining prices of electronic equipment result in large numbers of bankruptcies in the computer industry.

Question

Quizplus · Accepted Answer

This is an example of a positive externalities market failure. Successful public schools benefit the entire community, but the cost of funding and maintaining them falls solely on the government and taxpayers. There may not be enough incentive for private entities to invest in education due to the difficulty of capturing the external benefits. A market failure occurs when the free market does not allocate resources efficiently, leading to a loss of economic and social welfare. In this case, the market is failing to provide optimal education for all members of the society.

Which of the Following Is an Example of a Market