Market failures include all of the following EXCEPT
A) buyers pay for all the costs involved in the production of goods and services.
B) public goods.
C) positive externalities.
D) negative externalities.

Question

Quizplus · Accepted Answer

Buyers paying for all the costs involved in the production of goods and services is not a market failure, it is a normal market outcome. The other options are examples of market failures. Public goods are undersupplied by the market because they are non-excludable and non-rivalrous, making it difficult to charge people for their use. Positive externalities are not fully accounted for by the market because the benefits accrue to parties beyond the buyer and seller of a transaction. Negative externalities are also not fully accounted for by the market, as the costs are incurred by parties beyond the buyer and seller, creating a divergence between private and social costs.

Market Failures Include All of the Following EXCEPT