Economics Supply And Demand Questions
Market failure refers to a situation where the allocation of goods and services in a market is inefficient, resulting in an outcome that is not socially optimal. It occurs when the free market fails to allocate resources efficiently due to various factors such as externalities, imperfect information, market power, and public goods. Market failure can lead to underproduction or overproduction of goods, inequitable distribution of resources, and a lack of public goods provision. In such cases, government intervention or regulation may be necessary to correct the market failure and achieve a more efficient allocation of resources.