Question

Why does the government need to handle market failures?(1 point)
Responses

The natural forces of a free market tend to over correct for market failures.
The natural forces of a free market tend to over correct for market failures.

The natural forces of a free market do not tend to fix market failures due to individuals and producers making decisions based on their own self interest.
The natural forces of a free market do not tend to fix market failures due to individuals and producers making decisions based on their own self interest.

Market failures occur when goods or services are excludable.
Market failures occur when goods or services are excludable.

Market failures indicate a scarcity of resources, so it must be managed.

Answer 1

"The natural forces of a free market do not tend to fix market failures due to individuals and producers making decisions based on their own self interest."

Explanation: Left alone, markets can produce externalities, undersupply public goods, allow monopolies, and suffer information problems, so government intervention is needed to correct these failures and improve overall efficiency.