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Q: Demand side market failures occur when

  • 1
    supply curves do not reflect the full cost of producing a good or services
  • 2
    demand curves do not reflect consumer’s full willingness to pay for goods or services
  • 3
    government imposes tax on a good or a service
  • 4
    a good or service is not produced because no one demands it
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Answer : 2. "demand curves do not reflect consumer’s full willingness to pay for goods or services"
Explanation :

Answer: B) demand curves do not reflect consumer’s full willingness to pay for goods or services Explanation: Market failure arises because it is not possible for the market to correctly weight cost and benefits in a situation in which some of the cost is completely unaccounted. Demand-side market failures happen when demand curves do not reflect consumer’s full willingness to pay for goods or services. Supply-side market failures occur when supply curves do not reflect the full cost of producing a good or services.

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