When are some examples of free market fails?

Answer 1

Free market failures occur when the allocation of goods and services is not efficient, often leading to negative outcomes. Examples include monopolies, where a single company dominates the market and restricts competition; externalities, such as pollution, where the costs or benefits of a transaction affect third parties not involved in the exchange; and public goods, like national defense, which are non-excludable and non-rivalrous, leading to under-provision in a purely free market. These situations highlight the need for government intervention to correct inefficiencies and promote social welfare.