Market power and externalities are examples of
A)laissez-faire economics.
B)public policy.
C)market failure.
D)welfare economics.

Question

Quizplus · Accepted Answer

Market power and externalities are both examples of market failure, in which the free market fails to allocate resources efficiently. In the case of market power, a monopolist or oligopolist may restrict output and charge higher prices than a competitive market would. In the case of externalities, the actions of one party affect the well-being of others, but the cost or benefit is not reflected in market prices, leading to inefficient outcomes. Laissez-faire economics refers to a hands-off approach to government intervention in markets, while public policy and welfare economics relate to government interventions aimed at correcting market failures.

Market Power and Externalities Are Examples of