THE PROBLEM IN MARKETS SOLVE BY VARIOUS TYPES OF WAYS

MARKET FAILURE
In practice, there are many problem and markets sometimes fail to meet our needs. Market failure arises in a number of ways. We use the term Market Failure to cover all the circumstances in which equilibrium in free unregulated markets (i.e. markets not subject to direct price or quantity regulation by the government) will fail to achieve an efficient allocation (Begg, Fischer, Dornbusch, 2000, pg265). In economics terms freedom of enterprise will tend to produce inequality of wealth, because some people will be more talented, innovative, work harder, etc, than others. They will make profits where others fail. This means that individuals purchasing power, and hence the share of resources, which they can command, will be unequal. Therefore, we must be alert to ¡®market failures¡¯ in situations in which marketers attempts to solve problem may make them worse or cause other problems. Below are the possible sources of distortions that lead to market failure.

Imperfec...