In: Economics
Which of the following scenarios are typically subject to market failure? (select all that apply)
a. |
A private good |
|
b. |
A service, such as national defense, where people can free ride |
|
c. |
An externality |
|
d. |
A price ceiling that is above the equilibrium price |
|
e. |
A good that is non-excludable and non-rival |
The valid options are:
Explanation: Services such as national defense come under public goods which the private market cannot effectively produce. An externality leads to over allocation or under allocation of resources. A good that is non-excludable and non-rival is a public good.