Market failure can be caused by
A)low consumer demand.
B)equilibrium prices.
C)externalities and market power.
D)high prices and foreign competition.

Question

Quizplus · Accepted Answer

Market failure can be caused by externalities (such as pollution or third-party effects) that are not factored into the market price, and market power (such as monopolies or oligopolies) that create inefficiencies and reduce competition. Low consumer demand and high prices may affect market outcomes, but they are not necessarily indicative of market failure. Equilibrium prices are the prices at which supply and demand are in balance and do not lead to market failure. Foreign competition, while it may impact domestic firms, is not a direct cause of market failure.

Market Failure Can Be Caused by