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Which of the following could not cause market failure? a
Which of the following could not cause market failure?
a. An uneducated person who does not value education.
b. A person who is so poor that he/she cannot bid for an item at its actual value.
c. The unintended consequences of someone's actions.
d. The existence of a natural monopoly.
Expert Solution
a. An uneducated person who does not value education.
Market failure is the result of the unequal allocation of resources between the market participants. If an uneducated person was interested in getting an education, but could not pay for it, then there is a market failure, because a buyer of service wants to buy, but cannot pay for it. But, in the case given here, the uneducated person is not a buyer because he does not value the service or does not want to take education. Such a person is ideally not a part of the market and he is not likely to cause market failure.
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