2.10 Market failure
Market failure occurs when the market forces of demand and supply are unsuccessful in allocating resources efficiently and cause external costs or external benefits. Private costs of production and consumption are the actual costs of a firm, individual or government. External costs are the negative side-effects of production or consumption incurred by third parties for which no compensation is paid. Social costs are the true (or full) costs of consumption or production to society as a whole, Social cost = private cost + external cost Private benefits are the benefits of production and consumption enjoyed...