Market failure and public goods

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1) Market failure occurs when the price mechanism causes an inefficient allocation of resources

2) Different types of market failure are:

  - externalities

  - public goods

  - imperfect market information

  - labour immobility

  - unstable commodity markets

3) Public goods are non - rival and non - excludable

  - Non rival the consumption by one consumer does not reduce the amount available for          others (example is a street light)

  - Non excludable  means anyone can use the good even if they have not payed for…


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