Which one of the following is/are the cause(s) of market failure ? I. Market power II. Incomplete…
Market power, incomplete information, externalities and public goods can all cause market failure. Each can prevent an unregulated market from allocating resources…
Choose your answer
Which one of the following is/are the cause(s) of market failure ?
I. Market power
II. Incomplete information
III. Externalities
IV. Public good
Answer and explanation
Correct answer D
Market power, incomplete information, externalities and public goods can all cause market failure. Each can prevent an unregulated market from allocating resources efficiently, so the complete combination includes I, II, III and IV.
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Karnataka SET (KSET)