types of market failure

Question 1

what is market failure

Answer 1

when the free market fails to allocate scarce resources at the socially optimum level

Question 2

types of market failure

Answer 2

-externalities and tragedy of the common: self interest
-merit/demerit goods: information failure
-public goods: free rider problem and profit motivated firms
-income inequality: inequity
-monopoly power: one dominant seller, high barriers to entry