Market failure

Quick recap on market failure, its causes and definitions associated with it.

  • Created by: Jade
  • Created on: 20-11-12 20:05
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    • A market will fail when there are positive & negative externalities or information failure.
    • Where the free market mechanism fails to meet economic efficiency
      • Results in an inefficient use of scarce resources
      • Free market mechanism: the system by which the market forces of demand and supply determine prices and the decisions made by consumers and firms.
      • Economic efficiency: where both allocative and productive efficiency are achieved.


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