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2.9 Market failure

Topic 2.9 - Market failure

This section of the Cambridge IGCSE Economics (0455) syllabus covers the following (hyerlinked) topics:

SectionTopicsGuidance
2.9.1Definition of market failure-
2.9.2Definitions of terms associated with market failure(i) public goods, (ii) merit goods, (iii) demerit goods, (iv) private benefits, (v) external benefits, (vi) social benefits, (vii) private costs, (viii) external costs, (ix) social costs, and (x) monopoly
2.9.3Causes of market failureCauses relating to (i) public goods, (ii) merit goods, (iii) demerit goods, (iv) external costs, (v) external benefits, and (vi) abuse of monopoly power
2.9.4Consequences of market failure

The 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

Please click on the relevant hyperlink below to access other InThinking resources for this section of the syllabus.

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