Market failure may arise because of ?
Correct answer: E. all of the above
- A. imperfect competition
- B. taxation
- C. externalities
- D. missing markets
- E. all of the above
Explanation
Imperfect competition, distortionary taxation, externalities, and missing markets can all prevent resources from reaching an efficient allocation. Therefore, each listed factor can contribute to market failure.
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Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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