From the
specification... 1.3 - Market Failure
,How do
externalities cause
market failure?
,Recap: Market Failure
Market failure is a situation where the free
market mechanism does not lead to an
optimal/efficient allocation of
resources and the needs and wants
of societies are not met. As a result, too
much or too little of a product can be
produced, leading to a net welfare loss
(society is worse off).
, Every day you drive to the
shops, buy an apple and eat
it.
Identify as many costs and
benefits of this simple action
as you can, to you and other
people.
specification... 1.3 - Market Failure
,How do
externalities cause
market failure?
,Recap: Market Failure
Market failure is a situation where the free
market mechanism does not lead to an
optimal/efficient allocation of
resources and the needs and wants
of societies are not met. As a result, too
much or too little of a product can be
produced, leading to a net welfare loss
(society is worse off).
, Every day you drive to the
shops, buy an apple and eat
it.
Identify as many costs and
benefits of this simple action
as you can, to you and other
people.
