ECONOMICS
MARKET FAILURES
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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TWO ANSWERS ARE CORRECT:Market failure occurs:
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The free market fails to open on time
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Free markets fail efficiently allocate resources
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Price mechanism is NOT low enough for all consumers to afford the good
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Price mechanism fails to account for all costs and benefits associated with consumption of a product
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Explanation:
Detailed explanation-1: -The two leading causes of market failure are externality and market power.
Detailed explanation-2: -Market failures can be corrected through government intervention, such as new laws or taxes, tariffs, subsidies, and trade restrictions.
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