A market failure occurs when a free market is unable to
A. distribute resources efficiently.
B. provide open opportunity
C. meet government regulations.
D. encourage innovation.
I'll be glad to check your answer.
Yes, I think it should be A.
A. distribute resources efficiently.
A market failure occurs when a free market is unable to distribute resources efficiently. To determine the correct answer, we need to understand what market failure is and which option accurately describes it.
Market failure occurs when the allocation of goods and services by a free market is not efficient in terms of ensuring the best distribution of resources. This can happen due to various reasons such as externalities (when the production or consumption of a good affects a third party not directly involved in the transaction), market power (when a single buyer or seller has significant influence over prices), information asymmetry (when one party has more information than the other), or public goods (goods that are non-excludable and non-rivalrous).
Now let's analyze the options:
A. "Distribute resources efficiently" accurately describes market failure. When a free market fails to efficiently allocate resources, it leads to market failure.
B. "Provide open opportunity" refers to ensuring equal opportunities, which is not directly related to market failure.
C. "Meet government regulations" is not the main cause of market failures. While government regulation may be put in place to address market failures, it is not the cause of them.
D. "Encourage innovation" is not the primary cause of market failure. Market failures are typically caused by the reasons mentioned earlier, not by a lack of innovation.
Therefore, based on the explanation provided, the correct answer is A. distribute resources efficiently.