ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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free markets fail to distribute resources efficiently.
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goods fail to arrive at a market in a timely fashion.
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government builds infrastructure.
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voluntary exchange in a market fails to result in a sale.
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Detailed explanation-1: -Market failure refers to inefficient allocation of resources in the free market that occurs when individuals acting in rational self-interest generate less-than-optimal economic outcomes.
Detailed explanation-2: -The failure of private decisions in the marketplace to achieve an efficient allocation of scarce resources is called market failure. Markets will not generate an efficient allocation of resources if they are not competitive or if property rights are not well defined and fully transferable.
Detailed explanation-3: -Market failure can be caused by a lack of information, market control, public goods, and externalities. Market failures can be corrected through government intervention, such as new laws or taxes, tariffs, subsidies, and trade restrictions.
Detailed explanation-4: -The two leading causes of market failure are externality and market power.