Read this section for a more detailed look at the topic of market failure. Attempt the "Try It” problem before checking your answer.
- Explain what is meant by market failure and the conditions that may lead to it.
- Distinguish between private goods and public goods and relate them to the free rider problem and the role of government.
- Explain the concepts of external costs and benefits and the role of government intervention when they are present.
- Explain why a common property resource is unlikely to be allocated efficiently in the marketplace.
This text was adapted by Saylor Academy under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License without attribution as requested by the work's original creator or licensor.