ECONOMICS
MARKET FAILURES
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
True
|
|
|
False
|
|
|
Either A or B
|
|
|
None of the above
|
Detailed explanation-1: -Summary: Public goods constitute a market failure because: 1) lack of enforceable property rights (nonexcludable), 2) not a divisible homogenous products (nonrival). The private market has no incentive to provide such goods, hence market failure.
Detailed explanation-2: -Market failure is an economic term applied to a situation where consumer demand does not equal the amount of a good or service supplied, and is, therefore, inefficient.
Detailed explanation-3: -Key Takeaways. A market failure is when there is an inefficient distribution of goods and services that leads to a lack of equilibrium in a free market. The law of supply and demand is meant to lead to an equilibrium in prices, and when it does not it indicates a factor in the market has failed.
Detailed explanation-4: -A simple example of market failure is when a monopolist seller sets high rates to the products leaving no choice for the buyers other than to purchase the overpriced goods.