Market failure implies that the forces of supply and demand have not led society to the optimal mix of output.

Question

Quizplus · Accepted Answer

Market failure occurs when the market does not allocate resources efficiently, resulting in a suboptimal outcome for society. This can be caused by externalities, public goods, market power, informational asymmetries, and other factors that disrupt the equilibrium of supply and demand.

Market Failure Implies That the Forces of Supply and Demand