Question

Write an explanatory notes on market failure​

Answer 1

Answer:

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Answer 2

Explanation:

Market failure is the economic situation defined by an inefficient distribution of goods and services in the free market. In market failure, the individual incentives for rational behavior do not lead to rational outcomes for the group.In other words, each individual makes the correct decision for him or herself, but those prove to be the wrong decisions for the group. In traditional microeconomics, this can sometimes be shown as a steady-state disequilibrium in which the quantity supplied does not equal the quantity demanded.

KEY TAKEAWAYS

Market failure occurs when individuals acting in rational self-interest produce a less than optimal or economically inefficient outcome.

Market failure can occur in explicit markets where goods and services are bought and sold outright, which we think of as typical markets.

Market failure can also occur in implicit markets as favors and special treatment are exchanged, such as elections or the legislative process.

Market failures can be solved using private market solutions, government-imposed solutions, or voluntary collective actions.

Hope it helps