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Market Failure

GCSE ECONOMICS: UNIT 12. Market Failure. The e conomy at w ork. Lesson Objectives. Understand what is meant by market failure Produce a short 5 minute lesson on one of the types of market failure. Market Failure. In today’s lesson we will be looking at Market Failure

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Market Failure

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  1. GCSE ECONOMICS: UNIT 12 Market Failure The economy at work

  2. Lesson Objectives • Understand what is meant by market failure • Produce a short 5 minute lesson on one of the types of market failure

  3. Market Failure • In today’s lesson we will be looking at Market Failure • Before understanding how a market fails it’s important you know what a market is! • Write down your own definition of a market

  4. What is a market? • A market is a place where buyers and sellers come together to conduct a transaction together • Markets left to operate freely have a good chance of operating efficiently • By operating efficiently, business costs can be kept low in order to improve profits • In this way, the market ensures that the resources are allocated efficiently

  5. What is market failure? • Market failure occurs when markets fail to allocate resources efficiently • This means the prices of goods and the quantities produced are not at the level that ensures that economic welfare is kept as high as possible • For example, if a market fails, some goods may be under-produced or not even produced at all

  6. Types of market failure • There are a number of different types of market failure, such as: • Merit goods/De-merit goods • Public goods • Imperfect competition e.g. monopoly • Positive externalities/ Negative externalities • Unequal distribution or income/wealth • Immobility of factors of production (e.g. immobility of labour)

  7. Types of market failure: Over to you • You have 15 minutes to research your chosen type of market failure • Produce a handout which includes the following; • a clear definition of your type of market failure • an explanation as to why it occurs • examples of your type of market failure in the real world • You will present your findings to the other groups

  8. Match the keyword to the expression which fits best Market Failure There is enough for everyone Non-rival You buy it….no you buy it! Non-excludable Too much or too little, but never just enough Free-rider You can’t stop me

  9. What do you see? Under-consumed!

  10. What do you see? Over-consumed!

  11. What do you see? Healthcare would beunder-consumed ifthe government didn’t step in!

  12. What do you see? Over-consumed!

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