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2.9. Market failure

Syllabus
0455–2027–2028
Topic
2.9
Level
—

2.9.1—Definition of market failure

  • Definition of market failure

2.9.2—Definitions of terms associated with market failure:

  • public goods, merit goods, demerit goods, private benefits, external benefits, social benefits, private costs, external costs, social costs, monopoly

2.9.3—Causes of market failure

  • causes relating to public goods, merit goods, demerit goods, external costs and external benefits, abuse of monopoly power

2.9.4—Consequences of market failure

  • implications of misallocation of resources in relation to:
  • the over-consumption of demerit goods and goods with external costs
  • the under-consumption of merit goods and goods with external benefits
  • the non-provision of public goods
  • restricted supply causing higher prices under a monopoly Note: demand and supply diagrams relating to market failure are not required.

Objective notes

4 learning objectives
ConceptIGCSE Economics