Market failures
A) are usually caused by government interference in the economy.
B) prevent the price system from attaining economic efficiency.
C) encourage people to purchase more of a good than they really want.
D) encourage businesses to produce more of a good than they really want to.

Question

Quizplus · Accepted Answer

Market failures occur when the price system fails to allocate resources efficiently, such as when there is a lack of competition, externalities, public goods, or imperfect information. Government interference can sometimes exacerbate market failures but is not the root cause. Market failures can lead to underproduction or overproduction of goods, depending on the nature of the failure.

Market Failures