Which of the following is NOT an example of market failure?
A) Water is polluted by a paper company located by a river.
B) Air is polluted by a manufacturing firm.
C) Competition leads firms to provide products at the lowest possible price.
D) Consumers must buy water from one local water utility.

Question

Quizplus · Accepted Answer

Competition leading firms to provide products at the lowest possible price is not a market failure, as it shows that the market is functioning effectively. The other options are examples of market failure: water pollution caused by a firm's actions, air pollution caused by a manufacturing firm, and lack of choice for consumers in purchasing water from only one utility.

Which of the Following Is NOT an Example of Market