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- Subject
- Marketeconomics-mcqs › market
- Published
- 31 May 2019
- Last updated
- 28 May 2026
Why do markets occasionally fail to develop or operate effectively?
Multiple choice question for Market. Select an option, then review the explanation below.
Explanation
Markets can fail when externalities (uncompensated side effects) exist, or when the free-rider problem occurs, where people benefit without contributing. Therefore, both factors (options A and B) lead to market failure.
More Market MCQs
Practice related questions from the same subject.
- 1.Broadcasting firms use satellite TV subscriptions and signal detection tools primarily to combat which issue?
- 2.Which of the following is a classic example of a public good?
- 3.Which of the following factors can lead to market failure?
- 4.When a neighbor burns yard debris and smoke enters your home, what type of externality does this represent?
- 5.Why is a competitive equilibrium considered Pareto efficient?