Seekh Logo

AI-powered learning platform providing comprehensive practice questions, detailed explanations, and interactive study tools across multiple subjects.

Explore Subjects

Sciences
  • Astronomy
  • Biology
  • Chemistry
  • Physics
Humanities
  • Psychology
  • History
  • Philosophy

Learning Tools

  • Study Library
  • Practice Quizzes
  • Flashcards
  • Study Summaries
  • Q&A Bank
  • PDF to Quiz Converter
  • Video Summarizer
  • Smart Flashcards

Support

  • Help Center
  • Contact Us
  • Privacy Policy
  • Terms of Service
  • Pricing

© 2025 Seekh Education. All rights reserved.

Seekh Logo
HomeHomework HelpeconomicsMarket Failures and Public Goods

Market Failures and Public Goods

Market failures occur when the allocation of goods and services by a free market is not efficient, often due to externalities or public goods, which are non-excludable and non-rivalrous resources that individuals cannot be effectively excluded from using, leading to underproduction or overconsumption. Public goods, such as clean air or national defense, require collective action for provision and maintenance, as their benefits are available to all, regardless of individual contribution.

intermediate
3 hours
Economics
0 views this week
Study FlashcardsQuick Summary
0

Overview

Market failures occur when the free market does not allocate resources efficiently, leading to negative outcomes for society. This can happen due to various reasons, including externalities, public goods, and monopolistic practices. Understanding these failures is crucial for implementing effective ...

Quick Links

Study FlashcardsQuick SummaryPractice Questions

Key Terms

Market Failure
A situation where the allocation of goods and services is not efficient.

Example: Pollution is a market failure because it affects third parties.

Public Goods
Goods that are non-excludable and non-rivalrous.

Example: National defense is a public good available to all citizens.

Externality
A side effect of an action that affects others who did not choose to be involved.

Example: A factory polluting a river affects nearby residents.

Free Rider Problem
When individuals benefit from resources they do not pay for.

Example: People enjoying a public park without contributing to its maintenance.

Private Goods
Goods that are both excludable and rivalrous.

Example: A sandwich is a private good because one person's consumption prevents another's.

Social Welfare
The overall well-being of society, often considered in economic policies.

Example: Policies aimed at reducing poverty improve social welfare.

Related Topics

Externalities
The impact of one party's actions on others not involved in the transaction.
intermediate
Public Policy
The principles and regulations that govern society's economic decisions.
intermediate
Economic Efficiency
The optimal allocation of resources to maximize output and welfare.
advanced

Key Concepts

Market FailurePublic GoodsExternalitiesFree Rider Problem