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Answer : 1 Prices do not reflect the full social cost of production Explanation : Answer: A) Prices do not reflect the full social cost of production Explanation: Prices do not reflect the full social cost of production is an example of Market failure. A market failure occurs when the supply of a good or service is insufficient to meet demand. This results in an inefficient distribution of resources among market participants.It also occurs if externalities are not accounted for.If a firm fails to maximize its profits this is not a general market failure.

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