Question

Which of the following statements is not correct? a. Market power can cause markets to be inefficient. b. The invisible hand can remedy all types of market failures. c. Externalities can cause markets to be inefficient. d. An invisible hand leads buyers and sellers to an equilibrium that maximizes total surplus.

Answer 1

Option B is correct.

The invisible hand can remedy all types of market failures.

Step-by-step explanation:

A market failure is something that is inherent to the market that causes the market equilibrium allocation to be inefficient. Market failures are numerous in the resource and environmental sector of the economy. The market fails in the allocation of many environmental and natural resources, making the overall allocation of resources inefficient.