The term market failure refers to
A)a situation in which the market on its own fails to allocate resources efficiently.
B)an unsuccessful advertising campaign which reduces demand for a product.
C)a situation in which competition among firms becomes ruthless.
D)a firm that is forced out of business because of losses.

Question

Quizplus · Accepted Answer

Market failure occurs when the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss. This can be due to reasons such as externalities, public goods, or information asymmetries.

The Term Market Failure Refers to