The presence of market failures implies that

A) money is not an effective tool for exchange in a market system.
B) there is an active role for government, even in a market system.
C) individuals and firms should strive to be self-sufficient rather than specialize.
D) command systems are superior to market systems in the allocation of resources.

Market Failures

Situations where markets do not allocate resources efficiently on their own, leading to a loss of economic welfare.

Government Role

The activities undertaken by a government to regulate and administer economic, social, and political affairs.

Market System

An economic system in which decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.