1.Why does the Market Structure rely on the following factors?
2.What are five weaknessess in the market system that may lead to market failure?
For number 1 the factors are:
a.The profit motive
b.Good levels of information available
c.Price accurately reflecting costs/benefits
d.Ease with which resources can move to different users
For number 2 the quote is "The efficiency of the market system is not always matched in reality."
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Ans1: As we know that market steucture rely's on degree of competetion, ws the profit is concerned, profit motive become the first priority. Information is need of all successs in any growing market. Analysis of cost and benefit works like a charma in competing the market which is our main target. Finally resources or services should be travel in markt for better cnsumption.
the quantity of a product demanded by consumers
economically ideal factors
optimal allocation of resources
social cost of producing the good
The five factors leding to a market failure would be
1. Failure to take into all costs and benefits-The existence of externalties or the fact that external costs are not taken into accunt would result in markrt failure.
2. Merit Goods - The underprovision of merit goods result in market failure as conumers doesnt understand the value of merit goods until they finish consuming it.
3. Public Goods - As the private sector or the price mechanism fail to provide this it can create market failure this is due to Free rider problems.
4. Information Failure - Assymetris information in the market would lead to market failure as one party is having more information than the other party.
5. Factor Mobbility - Due to Limited factors of production it could create market failure cuz when the demand increases the supply may adjust slowly or inadequatly
There are other factors leading to market failure as Government failure, Abuse of market power, Inequality.
I think the second question of yours was answered.
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