Market failure occurs when the pursuit of self-interest leads to bad results.

Question

Quizplus · Accepted Answer

Market failure occurs when the market mechanism is unable to allocate resources efficiently and leads to a misallocation of resources, causing negative externalities, incomplete information, public goods, or monopoly power. This can happen when individuals or firms pursuing their own self-interest do not take into account the social costs or benefits of their actions.

Market Failure Occurs When the Pursuit of Self-Interest Leads to Bad