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  • Question
  • Demand side market failures occur when


  • Options
  • A. supply curves do not reflect the full cost of producing a good or services
  • B. demand curves do not reflect consumer?s full willingness to pay for goods or services
  • C. government imposes tax on a good or a service
  • D. a good or service is not produced because no one demands it

  • Correct Answer
  • demand curves do not reflect consumer?s full willingness to pay for goods or services 

    Explanation

    Market failure arises because it is not possible for the market to correctly weight cost and benefits in a situation in which some of the cost is completely unaccounted.

    Demand-side market failures happen when demand curves do not reflect consumer?s full willingness to pay for goods or services.

    Supply-side market failures occur when supply curves do not reflect the full cost of producing a good or services.

  • Tags: Bank Exams, CAT, Analyst, Bank Clerk, Bank PO

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