What areCauses of the market failer?

Answer 1

Market failure occurs when the allocation of goods and services is not efficient, often due to several key causes. These include externalities, where the costs or benefits of a transaction affect third parties not involved in the exchange; public goods, which are non-excludable and non-rivalrous, leading to underproduction; and information asymmetry, where one party has more or better information than the other, resulting in suboptimal decision-making. Additionally, market power, such as monopolies, can distort pricing and output, further contributing to inefficiencies.