Question

what are the limitation of market mechanism system
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Answer 1

Answer:

Market forces lead to sometimes misallocation of present and future resources or at least to one which may not be in the best long-run social interest, as the process fails to take care of priorities.

Explanation:

Market mechanism fails to provide a proper guideline for using appropriate material for selecting project.

Answer 2

The limitations of market mechanism include unfair competition, fall in the level of investments, creation of monopoly etc.

• Market Mechanism is the process of determining the price of commodities between consumers and producers that are produced.

• The limitations of market mechanism are -

1. As the market is an imperfect alternative, the chances of failure are more.
2. It does not lead to efficient competition practices.
3. It leads to the formation of monopoly and oligopoly.
4. Does not ensure that individual decisions maximize economic efficiency in terms of the interests and economic objectives of the community.
5. The level of investments can also fall below a social optimum.