Studied by 1 person
What’s the function of the markets system?
meant to ensure that goods and services are provided and that resources are allocated between competing uses to best meet the needs and wants of consumers.
What’s the definition of market failure?
market mechanism leads to a misallocation of resources, either completely failing to provide a good/service, or providing the wrong quantity.
What are “missing markets”?
When a good simply is not provided, we have complete market failure, or a ‘missing market’.
Examples would include street lighting and national defence.
What is partial market failure?
market left to its own devices would operate to some extent, but not as we would want it to.
When do market failure occur?
when the market is unable to efficiently allocate scarce resources to meet the needs of society
What’s another name for market failure?
allocative inefficiency
