Which of the following statements about market failure is not true?
A) Market failure causes an inefficient allocation of resources, even in a competitive market.
B) Market failure can come from causes on the demand side or the supply side of a market.
C) Market failure always results from some government action or policy in a market.
D) Market failure can result from the number of sellers in a market being too few to ensure competition.

Question

Quizplus · Accepted Answer

Market failure can result from a variety of factors, including externalities, public goods, imperfect competition, and incomplete or asymmetric information. It does not always result from government action or policy in a market. In fact, government intervention can sometimes correct market failures.

Which of the Following Statements About Market Failure Is Not