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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- MARKET FAILURE
- 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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