Question

Market failure occurs when:____________.1. an unrestrained market economy leads to too few or too many resources going to a specific economic activity. 2. one good is superior to another and drives it out of the market. 3. a good is too expensive for the market to provide. 4. the stock market experiences a very large loss.

Answer 1

Answer: A

Step-by-step explanation:

Market failure is a situation whereby the allocation of goods in a free market is inefficient which often results in a net loss of economic value. It is a scenario where individuals self interest leads to inefficient outcomes. Government intervene in the market as a result of market failure. An unrestrained market which isn't controlled by the government will result into few or much goods being uses for a particular economic activity.

The main forms of market failure are market control, public goods, imperfect information and externalities.