Which term describes a situation where there is no market to allocate a particular resource?

Which term describes a situation where there is no market to allocate a particular resource?

• A. Missing Markets
• B. Shortages Due to Price Ceilings
• C. Surplus Due to Low Demand
• D. Price Discrimination

Answer: (A)

Missing markets occur when there is no market to allocate a particular resource. In these cases, there is no price signal to ration or distribute the resource, so allocation tends to be determined by non-market means such as government rules, regulation, or arbitrary allocation. This is different from situations where a market exists but is distorted by price controls or demand shifts. For example, a price ceiling causes a shortage within an existing market, not the absence of a market itself. A surplus due to low demand also occurs within a market framework, driven by price or demand levels. Price discrimination involves charging different prices to different buyers, which changes pricing within a market rather than creating no market at all.

Missing markets occur when there is no market to allocate a particular resource. In these cases, there is no price signal to ration or distribute the resource, so allocation tends to be determined by non-market means such as government rules, regulation, or arbitrary allocation. This is different from situations where a market exists but is distorted by price controls or demand shifts. For example, a price ceiling causes a shortage within an existing market, not the absence of a market itself. A surplus due to low demand also occurs within a market framework, driven by price or demand levels. Price discrimination involves charging different prices to different buyers, which changes pricing within a market rather than creating no market at all.