ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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externalities exist
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many producers compete in the market
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there is a sole producer in market
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there is a very uneven distribution of income and wealth
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Detailed explanation-1: -The correct option is B, which is the market for fast foods. This is because the people will have to pay for buying the food which will make it a private good.
Detailed explanation-2: -Market failure occurs when there is a state of disequilibrium in the market due to market distortion. It takes place when the quantity of goods or services supplied is not equal to the quantity of goods or services demanded.
Detailed explanation-3: -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: -What Are Common Types of Market Failures? Types of market failures include negative externalities, monopolies, inefficiencies in production and allocation, incomplete information, and inequality.