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Characteristics Of Market Failure

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Market failure: It means that the market can not be efficient allocation of goods and services. Market failure can be seen as someone who wants to pursue personal interests leads to this result. “It describes any situation where the individual incentives for rational behavior do not lead to rational outcomes for the group. Put another way, each individual makes the correct decision for him/herself, but those prove to be the steady state disequilibrium in which the quantity supplied does not equal the quantity demanded.” Merit goods: means that goods and services that the government feels that people will under-consume, and which should be provided free at the point of use so that consumption does not depend primarily on the ability to pay …show more content…

Characteristics of monopoly: (1) a single firm selling all output in a market, (2) a unique product(3) restrictions on entry into and exit out of the industry, and more often than not (4) specialized information about production techniques unavailable to other potential producers. Externalities: means that a loss or gain in the welfare of one party resulting from an activity of another party, without there being any compensation for the losing party. Externalities are an important consideration in cost-benefit analysis. For example, a negative externality is pollution- pollution is generated by some productive enterprise and affects others who had no choice in the matter and were probably not taken into account in production decisions. Government In order to eliminate the market failure caused by the external, is introduced to external costs into the price, buyers and sellers in the incentive market change of rational choice, production or purchase closer to the society, the optimal quantity, efficiency deviation correcting externality …show more content…

To begin with, owing to contaminate for the water bodies, it would trigger the lakes, rivers, oceans even groundwater into water pollution. For instance, the water people have used for their goals, such as brushing teeth and washing cups, is emitted into rivers, which will put the river into water pollution. Also, an example could be used for the explanation of air pollution. With the more rapid industrialized, exhausted fumes from the industrialization will be put into the air, thus the air will be polluted by the exhausted

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