Market Failure
- Created by: Em
- Created on: 19-03-16 05:14
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Market Failure
- When the allocation of resources is inefficient
or
- The production of socially desirable goods/services doesn't meet demand
The overproduction of socially undersirable goods/services
- Socially undesirable goods/services include illegal drugs, prostitution, guns, pollution etc.
- These have a negative effect on families and communities (they are negative externalities)
The underproduction of socially desirable goods/services
- An example of a socially desirable good/service is public healthcare
- These 'public' and socially desirable goods/services are actually produced/owned by private sectors (businesses)
- They are underproduced because the private sectors can't sell them at a profitable price
- These…
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