Question : Market failure occurs when:
Option 1: Markets allocate resources efficiently
Option 2: Markets allocate resources inequitably
Option 3: Markets fail to allocate resources efficiently
Option 4: Markets fail to allocate resources inequitably
Correct Answer: Markets fail to allocate resources efficiently
Solution : The correct answer is (c) markets fail to allocate resources efficiently.
Market failure refers to situations in which the free market mechanism, driven by supply and demand, fails to allocate resources efficiently to maximize societal welfare. In such cases, the allocation of goods, services, or resources by markets does not lead to the most desirable or optimal outcomes from an economic or social perspective.
In the presence of market failures, interventions such as government regulations, taxes, subsidies, public provision of goods, and other policy measures may be necessary to correct the inefficiencies and promote the well-being of society.
Question : The main purpose of a government budget is to:
Option 1: Maximize profits for the government
Option 2: Minimize the size of the government
Option 3: Allocate resources efficiently
Option 4: None of the above
Question : Which market provides a platform for trading agricultural products and natural resources?
Option 1: Stock market
Option 2: Commodity market
Option 3: Forex market
Option 4: Bond market
Question : Commercial banks are active participants in which market?
Option 1: Money market
Option 2: Capital market
Option 4: Housing market
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