The term market failure refers to a

Marketing Dec 25, 2020

The term market failure refers to

a. a situation in which the market on its own fails to allocate resources efficiently.

b. an unsuccessful advertising campaign that reduces demand for a product.

c. a situation in which competition among firms becomes ruthless.

d. a firm that is forced out of business because of losses.

Expert Solution

The correct answer is (a). Failure to efficiently allocate resources by the market is known as market failure. In such an economic problem, every person develops the appropriate decision in their favor. However, those demonstrate incorrect choices for the entire group.

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