A principal cause of market failure is actions generating side effects that are not properly taken into account by the market.False

Question

Quizplus · Accepted Answer

Market failure occurs when the allocation of goods and services by a free market is not efficient, resulting in an overallocation or underallocation of resources. One of the main causes of market failure is externalities, where the actions of individuals or firms generate external costs or benefits that are not reflected in the market price. These side effects can lead to underproduction or overproduction of goods or services, creating inefficiencies in the market.

A Principal Cause of Market Failure Is Actions Generating Side