A situation in which the market system allocates too many resources to the production of a given activity is known as
A)market allocation.
B)market failure.
C)market efficiency.
D)market breakdown.

Question

Quizplus · Accepted Answer

Market failure occurs when the market system fails to allocate resources efficiently, and this can happen when there is an overproduction of a product or activity, leading to a misallocation of resources. This can happen, for example, when negative externalities are not taken into account, and the cost of the activity is borne by others, or when the market is dominated by a few large producers who distort competition and pricing.

A Situation in Which the Market System Allocates Too Many