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Homework answers / question archive / An example of an activity that can be affected by both types of market failures would be a
An example of an activity that can be affected by both types of market failures would be
a. public roads that have pot holes.
b. a fireworks display that caused some fire damage.
c. cigarette smoking that hurt non-smokers.
d. public library that conducted reading classes.
Market failure refers to the situations in economics, which may be defined by the distribution of the goods and services inefficiently in the free market. The market failure takes place when the individuals focus on acting in a rational manner for their interest aims at producing a less economical inefficient output. Market failures may include monopoly, externalities, etc. Thus, a fireworks display that caused fire damages refers to an example which is affected by both types of failures. (Correct answer: b)
