A situation in which a market economy leads to too few or too many resources going to a particular economic activity is known as
A) competition.
B) excessive competition.
C) destructive competition.
D) a market failure.

Question

Quizplus · Accepted Answer

A market failure occurs when the market mechanism fails to allocate resources efficiently, leading to either an under-allocation or over-allocation of resources to a particular economic activity. This can happen due to several reasons like externalities, public goods, imperfect competition, and information asymmetry. Therefore, option D is the correct answer.

A Situation in Which a Market Economy Leads to Too