When markets fail, public policy can potentially remedy the problem and increase economic efficiency.

Question

Quizplus · Accepted Answer

Market failures occur when the market does not allocate resources efficiently on its own, leading to negative externalities, public goods, asymmetric information, or monopolies. Public policy interventions, such as taxes, subsidies, regulations, or the provision of public goods, can help correct these failures and improve overall economic efficiency.

When Markets Fail, Public Policy Can Potentially Remedy the Problem