When the allocation of resources in a free market environment is such that a different allocation would increase society's welfare,economists say that:
A) market failure has occurred.
B) the efficiency condition is met.
C) decision makers have faced the full marginal benefits and marginal costs of their decisions.
D) producers have maximized total cost.

Question

Quizplus · Accepted Answer

When the allocation of resources in a free market environment does not result in the most efficient use of resources, it is considered a market failure. This means that the market has failed to allocate resources in a way that maximizes societal welfare.

When the Allocation of Resources in a Free Market Environment