How Do the Concepts of Market Failure and Failure of Market

question 30

Multiple Choice

How do the concepts of market failure and failure of market outcome relate to the concept of Pareto optimality?

• A) Market failure is judged by the criteria of Pareto optimality; failure of market outcome rejects Pareto optimality as the sole criterion.
• B) Failure of market outcome is judged by the criteria of Pareto optimality; market failure rejects Pareto optimality as the sole criterion.
• C) Both market failure and failure of market outcome are judged by the criteria of Pareto optimality.
• D) Both market failure and failure of market outcome reject the criteria of Pareto optimality for another criterion.

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Definitions:

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