Question

Sources of market failure include A) private goods. B) competitive behavior. C) externalities. D) unequal income distribution.

Answer 1

Answer:

C) externalities

Explanation:

Market failure -

It is the condition when the free - market system fails to fulfill the needs of the society .

The private market does not work efficiently by bringing the allocation of the resources .

And , hence , the government intervene into this situation to fulfill the needs of the society .

The sources of market failure is as follows -

• externalities  ( i.e the third person side effects ) .

• monopolies  .

• public goods  .

• unfair distribution of income leading to standard of living issues (arguable) .