When the market does not produce the most efficient outcomes, it is known as:
A) capitalism.
B) corruption.
C) market failure.
D) fraud.

Question

Quizplus · Accepted Answer

Market failure occurs when the free market fails to allocate resources efficiently, resulting in underproduction or overproduction of goods and services, as well as the production of negative externalities that harm society. This can occur due to a variety of reasons, such as monopoly power, externalities, public goods, and incomplete information. It is an economic concept that points towards inefficiency in market outcomes.

When the Market Does Not Produce the Most Efficient Outcomes