What can cause market failure?
A) low consumer demand
B) government intervention and price controls
C) externalities and market power
D) high prices and foreign competition

Question

Quizplus · Accepted Answer

Externalities (when the actions of one party have an impact on the well-being of others without being reflected in the market price) and market power (when one or a few firms have the ability to significantly influence the market price) can both cause market failure. Low consumer demand, high prices, and foreign competition may create challenges for businesses, but they do not necessarily result in market failure. Government intervention and price controls can also lead to market failure, but this is not the only cause.

What Can Cause Market Failure