Why do markets occasionally fail to develop or operate effectively?

Show Answers

Due to external effects impacting third partiesBecause of individuals benefiting without payingBoth external effects and free-rider issuesBoth external effects and option C

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.