An imperfection in the market mechanism that prevents optimal outcomes is called
A)Antitrust behavior.
B)Collusion.
C)Market failure.
D)Price leadership.

Question

Quizplus · Accepted Answer

Market failure refers to a situation where the market mechanism fails to allocate resources in the most efficient way, leading to suboptimal outcomes such as underproduction or overproduction of goods, unequal distribution of resources, and externalities. Antitrust behavior and collusion both refer to actions taken by firms to limit competition in the market and are not necessarily related to market failure. Price leadership is a pricing strategy used by a dominant firm in the market to set prices and is also not directly related to market failure.

An Imperfection in the Market Mechanism That Prevents Optimal Outcomes