Question

Which of the following is a situation that makes the market behave inefficiently?

a. When producers have the power to find out exactly what to produce
B. When consumers do not have enough information to make good choices
C. When both consumers and producers are fully informed about a product
D. When the market is in perfect competition and prices are high

Answer 1

Answer: B. When consumers do not have enough information to make good choices

Answer 2

B. When consumers do not have enough information to make good choices.

Step-by-step explanation:

When economists develop theories about the market, they usually do so under the assumption that the market operates under perfect conditions. In these scenarios, consumers are rational beings that know how to make good decisions. However, in real life, consumers often do not have enough information to make good choices. This can lead to a market that behaves inefficiently.