. Market failure occurs when the market
mechanism fails to allocate scarce resources
efficiently, so social costs are greater than
social benefits.
. Causes and Consequences of Markets Failure:
1) Only goods and services that are profitable to
make will be produced
2) Services such as street lighting won’t be
provide as you are unable to separate it.
3) Resources only employed if profitable –
people may be left unemployed without an
income.
4) Harmful goods may be produced and sold freely
5) Producers may ignore environmental
impacts
6) Monopolies dominate supply of products
and charge high prices.
mechanism fails to allocate scarce resources
efficiently, so social costs are greater than
social benefits.
. Causes and Consequences of Markets Failure:
1) Only goods and services that are profitable to
make will be produced
2) Services such as street lighting won’t be
provide as you are unable to separate it.
3) Resources only employed if profitable –
people may be left unemployed without an
income.
4) Harmful goods may be produced and sold freely
5) Producers may ignore environmental
impacts
6) Monopolies dominate supply of products
and charge high prices.