Which of the following is not an example of market failure?

Group of answer choices

Public good

Price control

Market power

Externality

Solutions

Expert Solution

A market failure occurs when there is an inefficient allocation of the goods in the society

Public good-there is an inefficient allocation because the goods are underproduced than the socially optimum level

Market power-the firm having a market power will set MC=MR instead of P=MC for producing the goods which will create an inefficient allocation of the goods

Externality = The externality whether its positive or negative will make the goods allocation inefficient as the goods would be underproduced or overproduced

Price control does not causes inefficient allocation but a shortage or surplus of the goods by setting the minimum or maximum price.

-Price control

Rahul Sunny answered 1 year ago

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