Which of the following is an example of market failure?
A) Public goods.
B) Externalities.
C) Lack of competition.
D) all of the above.

Question

Quizplus · Accepted Answer

All of the options listed are examples of market failure. Public goods are those that are difficult to exclude individuals from using, meaning that they may not be supplied at all or may be under-supplied in the market. Externalities occur when the actions of one party have a positive or negative impact on others who are not involved in the transaction, leading to an inefficient allocation of resources and market failure. Lack of competition can result in monopolies or oligopolies, leading to higher prices and a misallocation of resources, also resulting in market failure. Therefore, D is the correct answer as all the options given are examples of market failure.

Which of the Following Is an Example of Market Failure