ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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an increase in unsold goods because of a change in tastes
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an increase in travel time caused by a road accident
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an increase in house prices caused by easier borrowing for house buyers
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a general increase in the price of hotel rooms in busy summer seasons
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Detailed explanation-1: -The main types of market failure include asymmetric information, concentrated market power, public goods and externalities.
Detailed explanation-2: -There are five major elements that, if lacking or weak, can cause a market failure. The five major elements include: competition, information, mobility of resources, externalities, and distribution of public goods.
Detailed explanation-3: -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.
Detailed explanation-4: -Basically, a market fails when the private sector either under-provides what society would prefer more of (e.g., new infrastructure to increase mobility) or over-provides what it wants less of (e.g., air pollution from fuel exhaust).