She also said she did not see any reason to resign from her post despite the failed negotiations.
On Sunday evening, the FDP liberals pulled out of talks with Mrs Merkel’s CDU/CSU bloc and the Greens.
Germany’s president called on parties to “reconsider their attitudes”.
Frank-Walter Steinmeier urged them to make compromises for Germany’s “well-being”, amid a situation he said was unprecedented.
Mrs Merkel faces her biggest challenge in 12 years as chancellor.
“The path to the formation of a government is proving harder than any of us had wished for,” she told broadcaster ARD.
But she said she was “very sceptical” about a minority government, adding that “new elections would be the better path”.
In a separate interview with the ZDF broadcaster, she argued Germany needed stability and a government “that does not need to seek a majority for every decision”.
The elections were held in late September.
Some in Mrs Merkel’s party still hope for another grand coalition with the Social Democrats (SPD), despite that party repeatedly ruling such an option out.
Earlier on Monday, SPD leader Martin Schulz said his party was “not afraid of new elections”. (Courtesy BBC)