Question

What are the limitations of Market mechanism system?​

Answer 1

Answer:

In a market system, producers do not produce a good or a service if it is not profitable. But sometimes it may be necessary to produce some goods even if it is not profitable. Therefore Market system will fail in this aspect.

Answer 2

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

• The limitations of market mechanism are -

• As the market is an imperfect alternative, there are chances of failure.
• A market mechanism often does not lead to efficient competition practices.

• It leads to the formation of monopoly and oligopoly structures
• Does not ensure that individual decisions maximize economic efficiency in terms of the interests and economic objectives of the community.