Demand-side market failures occur when:
A) the demand and supply curves don't reflect consumers' full willingness to pay for a good or service.
B) the demand and supply curves don't reflect the full cost of producing a good or service.
C) government imposes a tax on a good or service.
D) a good or service is not produced because no one demands it.

Question

Quizplus · Accepted Answer

Demand-side market failures occur when the demand and supply curves don't reflect consumers' full willingness to pay for a good or service. This leads to an inefficient allocation of resources as the market price fails to accurately represent the true value of the good or service to society. As a result, there may be underproduction or overproduction of the good or service in question.

Demand-Side Market Failures Occur When