Inefficiency can be caused in a market by the presence of
A)market power.
B)externalities.
C)imperfectly competitive markets.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

All of the above can cause inefficiency in a market. Market power can lead to higher prices and lower output, externalities can result in costs or benefits that are not reflected in market prices, and imperfectly competitive markets can lead to higher prices and lower output as well. All three factors can result in a misallocation of resources and an inefficient market outcome.

Inefficiency Can Be Caused in a Market by the Presence