Market failure occurs
A) when the output level of the firm is efficient.
B) when the output level of the firm is inefficient.
C) when firms do not maximize profits.
D) only in the presence of a monopoly.
E) only in the presence of externalities.

Question

Quizplus · Accepted Answer

Market failure occurs when resources are not allocated efficiently, leading to an inefficient output level. This can happen due to various reasons, such as externalities, public goods, or market power, not just monopolies or externalities alone.

Market Failure Occurs