Question

A situation in which the unregulated competitive market outcome is inefficient because prices fail to provide proper signals to buyers and sellers is known as:

a) a market failure.
b) a disequilibrium.
c) a deadweight loss.
d) an imperfectly competitive market.

Answer 1

A situation in which the unregulated competitive market outcome is inefficient because prices fail to provide proper signals to buyers and sellers is known as a market failure.

Step-by-step explanation:

A situation in which the unregulated competitive market outcome is inefficient because prices fail to provide proper signals to buyers and sellers is known as a market failure. This occurs when the market does not allocate resources efficiently, resulting in a misallocation of goods and services. Examples of market failures include monopoly, pollution, inequality, and discrimination.