When the government provides free and reduced lunches to low-income students, it is addressing which type of market failure

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05-07-2022
Business

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When the government provides free and reduced lunches to low-income students, it is addressing which type of market failure

Sagot :

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vtalishathapar vtalishathapar · Answer 1 · 2022-07-08T03:57:43-04:00

A positive externality is when a good or service is produced and used in a way that benefits a party that is not directly involved in the market transaction.

What are the reasons for the Market Failure?

Externalities, public goods, market regulation, and a lack of knowledge are all possible causes of market failure. Market failures can be resolved through government involvement, such as new legislation, taxes, tariffs, subsidies, or trade restrictions.

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Thus, providing free and reduced lunches to low-income students by the government is a situation of positive externality where no directly involved in the market transaction.

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What are the reasons for the Market Failure?

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