Market Failure | A-Level Economics Notes
These revision notes cover everything you need to know about Market Failure for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017.
What is market failure?
Market failure occurs when there is a misallocation of resources.
What are the two main types of market failure?
Market failure can be complete or partial.
Complete market failure results in a missing market. This happens with public goods due to the free-rider problem.
Partial market failure occurs due to a misallocation of resources. It usually means that a good is over-produced or under-consumed. This can happen due to externalities.
Summary questions
- What is market failure?
- What are the two main types of market failure?
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