786_Madina
Badges: 3
Rep:
?
#1
Report Thread starter 2 years ago
#1
Can you explain about market failures and different types of it.
0
reply
Realitysreflexx
Badges: 22
Rep:
?
#2
Report 2 years ago
#2
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).
0
reply
BlairPeach
Badges: 12
Rep:
?
#3
Report 2 years ago
#3
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
0
reply
Lechatn0ir
Badges: 14
Rep:
?
#4
Report 2 years ago
#4
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.
0
reply
Lechatn0ir
Badges: 14
Rep:
?
#5
Report 2 years ago
#5
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?
0
reply
chelseagirl2002
Badges: 14
Rep:
?
#6
Report 2 years ago
#6
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.
0
reply
786_Madina
Badges: 3
Rep:
?
#7
Report Thread starter 2 years ago
#7
Thank u soo much
0
reply
X

Quick Reply

Attached files
Write a reply...
Reply
new posts
Back
to top
Latest
My Feed

See more of what you like on
The Student Room

You can personalise what you see on TSR. Tell us a little about yourself to get started.

Personalise

Have you experienced financial difficulties as a student due to Covid-19?

Yes, I have really struggled financially (44)
18.88%
I have experienced some financial difficulties (66)
28.33%
I haven't experienced any financial difficulties and things have stayed the same (87)
37.34%
I have had better financial opportunities as a result of the pandemic (30)
12.88%
I've had another experience (let us know in the thread!) (6)
2.58%

Watched Threads

View All
Latest
My Feed