ECONOMICS
MARKETS AND PRICES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When consumers don’t have enough info to make good choices
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When producers have power to find out exactly what to make
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when both consumers and producers are fully informed
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when a market is in perfect competition and prices are high
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Detailed explanation-1: -Market failure refers to the inefficient allocation of resources that occurs when individuals acting in rational self-interest produce a less-than-optimal outcome.
Detailed explanation-2: -Market inefficiencies exist due to information asymmetries, transaction costs, market psychology, and human emotion, among other reasons. As a result, some assets may be over-or under-valued in the market, creating opportunities for excess profits.
Detailed explanation-3: -Market failure is the economic situation defined by an inefficient distribution of goods and services in the free market. In market failure, the individual incentives for rational behavior do not lead to rational outcomes for the group.
Detailed explanation-4: -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-5: -The Forms of Market Inefficiency There are three main forms of market inefficiency. These are allocative, productive, and informational inefficiency.