Which of the following is the best example of market failure?
A) Lucian wants more video games but doesn't buy them because his willingness to pay is less than the equilibrium price in the market.
B) Kara's Kitten Shop won't sell more purebred cats because the equilibrium price in the market is less than it would cost her to provide more.
C) Alex and others in a community want a new outdoor soccer field and are willing to pay to use it,but no private business is willing to build it.
D) Government fixes the price of gasoline,resulting in a shortage.

Question

Quizplus · Accepted Answer

Option C is the best example of market failure because there is a lack of provision of a good that members of the community want and are willing to pay for, but no private business is willing to provide it. This shows a failure of the market to allocate resources efficiently. The other options do not necessarily represent market failure. Option A shows an individual choice not to purchase a good, option B shows a business decision based on cost-benefit analysis, and option D shows government intervention in the market.

Which of the Following Is the Best Example of Market