Which is an example of a market failure?
A) There are not enough tickets available to concerts of extremely popular performers.
B) The price of medical care has risen dramatically as a result of the introduction of sophisticated equipment and techniques.
C) Polio shots and chest x-rays provide widespread benefits to the community as a whole as well as to the individuals who get them.
D) Extensive decreases in the prices of electronic equipment resulted in large numbers of bankruptcies in the computer industry.

Question

Quizplus · Accepted Answer

Polio shots and chest x-rays provide widespread benefits to the community as a whole as well as to the individuals who get them. This is an example of market failure because these vaccines and treatments are considered public goods that cannot be efficiently provided by the private market. If left to the market, only a small portion of the population would obtain them, resulting in negative externalities for society as a whole.

Note: A, B, and D are not examples of market failure. A is an issue of scarcity and high demand, not a failure of the market. B is an example of the market responding to changes in technology and costs, which may result in higher prices. D is an example of market competition leading to some firms becoming less profitable and possibly going bankrupt, but not a failure of the market overall.

Which Is an Example of a Market Failure