Transcription of 4. MARKET FAILURE AND GOVERNMENT INTERVENTION
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Ph: 98851 25025/26 4. MARKET FAILURE AND GOVERNMENT INTERVENTION . Define MARKET FAILURE . What are the major aspects of MARKET FAILURE ? (B). 1. MARKET FAILURE : a) When the MARKET fails to allocate resources efficiently and therefore, MARKET outcomes become inefficient. b) MARKET FAILURE is a situation in which the free MARKET leads to misallocation of society's scarce resources in the form of either overproduction or underproduction of particular goods and services leading to a less than optimal outcome. 2. Phases of MARKET Failures: a) The two aspects of MARKET failures are demand-side MARKET failures and supply side MARKET failures.
MARKET FAILURE: Market failure is a situation in which the free market leads to misallocation of society's scarce resources in the form of either overproduction or underproduction of particular goods and services leading to a less than optimal outcome. Reasons for the Market Failure: There are four major reasons for market failure. They are:
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