Question

If there is a lack of competition in a market, a market failure results because the quantity of goods sold is ___ than the optimal level while prices are ___ than the optimal level. lower; higher higher; lower higher; higher lower; lower

Answer 1

If there is a lack of competition in a market, a market failure results because the quantity of goods sold is lower than the optimal level while prices are higher than the optimal level.

Step-by-step explanation:

Market failure is inefficient distribution of goods and services.

Monopoly especially the one influenced by government is one of the main causes of market failure.

In a monopoly, a single supplier controls the entire supply of a product. This creates a rigid demand curve. That is, demand for the product remains relatively stable no matter how high its price goes. Supply can be restricted to keep prices high which leads to under provision, or scarcity.

Answer 2

Answer is lower; higher.

Refer below.

Step-by-step explanation:

If there is a lack of competition in a market, a market failure results because the quantity of goods sold is lower than the optimal level while prices are higher than the optimal level.