What Is a Market Failure

question 14

Multiple Choice

What is a market failure?

• A)It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost.
• B)It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal private cost.
• C)It refers to a situation where an entire sector of the economy (for example, the airline industry)collapses because of some unforeseen event.
• D)It refers to a breakdown in a market economy because of widespread corruption in government.

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Definitions:

Turbulence

Turbulence refers to violent or unsteady movement of air or water, or a situation characterized by conflict or confusion.

Active Avoidance

A type of learning in which an individual learns to perform a behavior to prevent or avoid an unpleasant stimulus.

Aversive Event

An unpleasant or harmful event or stimulus that an individual seeks to avoid or minimize.