ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The causes underlying market failures include negative externalities, incomplete information, concentrated market power, inefficiencies in production and allocation, and inequality.

Detailed explanation-2: -Financial market failure occurs when money, equity and bond markets failure to achieve an efficient and/or equitable outcome. This can lead to economic and social costs including macro instability and loss of trust and confidence in financial institutions.

Detailed explanation-3: -One of the ways that governments can manage market failures is by implementing legislation that changes behavior. For example, the government can ban cars from operating in city centers, or impose high penalties to businesses that sell alcohol to underage children, since the measures control unwanted behaviors.

Detailed explanation-4: -Market failure can be caused by a lack of information, market control, public goods, and externalities. Market failures can be corrected through government intervention, such as new laws or taxes, tariffs, subsidies, and trade restrictions.