Final answer:
A market failure provides an economic rationale for government intervention in policy issues. The government seeks to correct market inefficiencies but must weigh the potential benefits of intervention against its own limitations and the interests it may serve. The correct option is (b).
Step-by-step explanation:
A market failure is an economic justification for government involvement in a policy problem. In situations where the market on its own fails to allocate resources efficiently, government intervention might be warranted. Common examples of market failures include monopolies and negative externalities.
The government, though, must balance the strengths and weaknesses of both markets and its own actions to address these issues without imposing unnecessarily cumbersome regulations or interventions that may not align with majority views or the public good.
Despite the potential for government action to address market failures, it is crucial to acknowledge that government intervention can also be imperfect. This means that careful consideration is needed to determine whether the intervention is likely to result in better outcomes than leaving the market to operate on its own. The aim is to ensure that public policies enacted reflect societal needs as a whole and are not predominantly influenced by the interests of a small group.