ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Business and consumers value personal benefits over social costs
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Businesses value personal benefits over social costs
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Consumers value social benefits over personal costs
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None of the above
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Detailed explanation-1: -Types of market failures include negative externalities, monopolies, inefficiencies in production and allocation, incomplete information, and inequality.
Detailed explanation-2: -Market Failure Examples Air pollution can cause significant third-party costs through poor air quality which can impact their health. Yet the external cost is not reflected in prices, nor are third parties reimbursed for such. This is known as a negative externality – where the cost is not reflected in the price.
Detailed explanation-3: -Answer and Explanation: The leading causes of market failure are externalities and market power. A positive externality affects the third party positively, For example, the provision of public education helps the learners, but the whole society will also benefit from that public good.
Detailed explanation-4: -There are five major elements that, if lacking or weak, can cause a market failure. The five major elements include: competition, information, mobility of resources, externalities, and distribution of public goods.