Market failure is said to occur whenever

A) competitive markets do not allocate resources in the most economically desirable way.
B) prices rise.
C) some consumers who want a good do not obtain it because the price is higher than they are willing to pay.
D) government intervenes in the functioning of competitive markets.

Question

Ashton Wilson · Accepted Answer

Final Answer : A, Explanation :  Market failure occurs when the allocation of resources in a market is not optimal or efficient. This can happen due to various reasons such as externalities, public goods, imperfect competition, and incomplete information. This results in a situation where the market fails to maximize the total welfare of the society. Prices rising and consumers not affording a good are not necessarily market failures, as they can be a result of supply and demand factors within a functioning market. Government intervention can address market failures, but it is not the only cause of such failures.

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