The presence of market failures implies that:

A) money is not an effective tool for exchange in a market system.
B) there is an active role for government,even in a market system.
C) individuals and firms should strive to be self-sufficient rather than specialize.
D) command systems are superior to market systems in the allocation of resources.

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Gurpreet bhatthal · Accepted Answer

Final Answer : B, Explanation :  Market failures refer to situations where markets do not effectively allocate resources or produce efficient outcomes. This can be due to factors such as externalities (where the actions of one party have an impact on others), information asymmetry (where one party has more information than others), or public goods (which are non-excludable and non-rivalrous). Given that market failures can lead to inefficient outcomes, there is a role for government intervention to correct these failures and promote greater efficiency. Therefore, choice B is the best answer. Choices A, C, and D do not accurately reflect the implications of market failures.

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