In a free market, market failure occurs when the price mechanism fails to allocate resources efficiently. Which of the following situations is a clear example of market failure?
A private healthcare provider restricts the supply of vaccinations to individuals willing and able to pay, resulting in a level of output where marginal social benefit exceeds marginal social cost (MSB>MSCMSB > MSCMSB>MSC).
An agricultural firm experiences a harvest failure due to adverse weather conditions, causing the market supply curve to shift to the left and the price to rise.
A multinational telecommunications company experiences internal diseconomies of scale as it expands, leading to higher long-run average costs.
A local retail shop goes bankrupt because a larger, more efficient supermarket chain opens nearby and undercuts its prices.
