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

Question

Responses

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

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.

Answer 1

The correct response is: 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.

This statement accurately reflects the justification for government intervention in cases of market failure, as the market may not allocate resources efficiently on its own.