When the market does not result in an efficient allocation of scarce resources, economists call this:
A) market dropout.
B) normative economics.
C) market disincentives.
D) market failure.

Question

Quizplus · Accepted Answer

When the market does not result in an efficient allocation of scarce resources, economists call this market failure. This means that resources are not being allocated optimally, leading to a suboptimal outcome for society as a whole. Market failure can occur for a variety of reasons, including externalities, public goods, information asymmetries, and monopolies. When market failure occurs, government intervention may be necessary to correct the inefficiencies and ensure a more efficient allocation of resources.

When the Market Does Not Result in an Efficient Allocation