The two main types of market failure are market power and externalities.?

Question

a. True
b. False

I think it is B

Answer 1

True

Market power - who has market power? Monopolies and oligopolies, or anyone able to set up barriers to entry into the market. all inefficient - market utopia is based on perfect competition

externalities - when you benefit from something you didn't pay for, when companies don't pay for water they use they feel free to waste it or pollute it. while you may actually be paying for water infrastructure, roads etc. while they make profits. Say they get tax breaks. this all throws off the equillibrium of markets

Answer 2

Markets do not allocate resources efficiently in the presence of market failures such as market power or externalities.