Market failure sometimes occurs in an unregulated competitive market

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    because externalities or incomplete information cause prices to fail to provide proper signals to consumers and producers.
     because the profit motive causes firms to charge as high a price as possible and consumers in turn demand a lower quantity than is efficient.
     shortages occur when consumers refuse to pay for increased input costs that producers sometimes face.
     surpluses occur when consumers refuse to pay for increased input costs that producers sometimes face.
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

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because externalities or incomplete information cause prices to fail to provide proper signals to consumers and producers.
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)

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