The term "market failure"
A)means the same thing as "market power."
B)refers to the dissolution of a market when firms decide to quit producing a certain product.
C)refers to the failure of a market to produce an efficient allocation of resources.
D)refers to government's failure to enforce the property rights of households or firms that participate in a certain market.

Question

Quizplus · Accepted Answer

Market failure refers to a situation where the free market fails to produce an efficient allocation of resources. This means that the market fails to allocate resources in a way that maximizes social welfare, leading to inefficiencies such as underproduction or overproduction, negative externalities, and unequal distribution of resources. Market power refers to the ability of a firm or group of firms to influence the market price of a good or service, which is a different concept altogether. The other options do not accurately describe the concept of market failure.

The Term "Market Failure