When producers do not produce the efficient amount of a product because they are unable to charge consumers what they are willing to pay for it, then we have a:
A) Demand-side market failure
B) Supply-side market failure
C) Competitive market
D) Monopolistic market

Question

Quizplus · Accepted Answer

This situation describes a demand-side market failure, where the market does not allocate resources efficiently due to the inability to capture the full willingness to pay of consumers.

When Producers Do Not Produce the Efficient Amount of a Product