Marginal private cost : Marginal social cost :: Market failure : ?

Marginal private cost refers to the cost that a producer faces when making one more unit of a good, while marginal social cost includes both the private cost and any additional costs that affect society, like pollution. When these two costs are not aligned, it can lead to market failure, which is when the market does not efficiently allocate resources. For example, if a factory produces goods and pollutes the air, the factory only considers its own costs but ignores the health issues it causes for the community. This results in too much production from a societal perspective, leading to over-pollution. Therefore, just as marginal private cost does not equal marginal social cost, market failure occurs when the market fails to account for external costs, leading to negative outcomes for society.