786_Madina
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Can you explain about market failures and different types of it.
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Realitysreflexx
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Market failure occurs when a good is in demand but no one specific (private/firm) entity has any benefit of supplying it efficiently. Which is why the government steps in to provide public services like police, army, infrastructure (roads).

Also occurs with services like street lamps because utility cannot be determined and confined to one person.

Market failure generally occurs when the incentives/profitability to supply a good arent strong enough, causing a failure of options in the market (market failure).
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BlairPeach
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Ultimately, it's a misallocation of resources.

Generally 2 types, complete (missing market) and partial (wrong quantity is being produced).
There is also environmental market failure eg pollution
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Lechatn0ir
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In general terms, it’s when resources are allocated by the free market economy in a way that results in Marginal social cost outweighing marginal social benefit OR where marginal social benefit outweighs cost but is not recognised by the demand mechanism, resulting in a lower than optimal equilibrium price (i.e the good is a merit good).

An example might be healthy food which is underpriced because its positive externalities are not considered by the buyers.
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Lechatn0ir
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There are so many aspects of market failure, including diagrams for each type and solution. Perhaps you should specify what bit you are struggling with in particular?
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chelseagirl2002
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Market failure occurs when a freely functioning market fails to allocate resources in a way that optimises social welfare. During a market failure, there may be times where it is necessary for the government to intervene in the market. For example, in the supermarket industry, the government may intervene to regulate the overconsumption of plastic bags. If markets are failing, then externalities (third party) are negatively affected.

Ways a market fails:
- Businesses overproduce
- Businesses underproduce
- Consumers overconsume
- Consumers underconsume

This is what I have for GCSE Economics. I hope it helped.
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786_Madina
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Thank u soo much
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