Econ marketing

Market failure is a situation that occurs when resources are not allocated effectively or efficiently. This economic concept can take a number of forms and appear in a variety of situations, and it is often viewed as something that needs to be corrected through intervention, usually on the part of the government, when it appears in the real world. For example, when fisheries experience market failure, the government is expected to step in with policy decisions that will resolve the issue.


When failure occurs, it means that the system is not Pareto efficient. Pareto efficiency refers to a situation in which any improvement to one area would cause a corresponding harm to someone else. For example, if a fried potato franchise lowers the price on its product, bringing about an improvement for consumers, it would also have to lower the price it pays to potato farmers, thereby causing harm. When a system reaches Pareto efficiency, it means that it is operating at optimum level, with everything in balance.Market failure is a situtation that allocate resources efficiently.
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