When markets fail,public policy
A)can do nothing to improve the situation.
B)can potentially remedy the problem and increase economic efficiency.
C)can always remedy the problem and increase economic efficiency.
D)can, in theory, remedy the problem, but in practice, public policy has proven to be ineffective.

Question

Quizplus · Accepted Answer

When markets fail, public policy has the potential to alleviate the situation and make the economy more efficient. This can be achieved through regulation or intervention to correct externalities, promote competition, redistribute income, or provide public goods. However, the effectiveness of public policy may depend on various factors such as the nature of the problem, the quality of policy design and implementation, and the presence of political and institutional constraints. Therefore, while public policy cannot always guarantee a solution, it can still offer a viable approach to address market failures.

When Markets Fail,public Policy