is a situation in which the allocation of goods and services by a free market is not efficient, leading to a net social welfare loss.

Market failure

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Laissez faire

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Free market

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Price distortion

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Solution

The correct option is A Market failure
When the market mechanism breaks down because one or more assumptions about the free market are not vaild, allocation of resources is not efficient, the market outcome is not the socially optimal outcome. This situtation is called market failure.

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