When resources are misallocated, or allocated inefficiently,
A) market failure occurs.
B) then there must be external costs or benefits in production.
C) then it must be the case that there is imperfect information in the market.
D) then it must be the case that the good is a public good.

Question

Quizplus · Accepted Answer

Market failure occurs when resources are not allocated efficiently, leading to a loss of economic and social welfare. Misallocation can result from various factors, including externalities, public goods, imperfect information, and market power, but the statement itself directly describes a scenario of market failure.

When Resources Are Misallocated, or Allocated Inefficiently