What happens during a market failure?

• A market failure is an economic situation in which the distribution of commodities on the free market is insufficient. In this form of the free market, however, item costs are set by demand and supply, and any change in one of these forces could cause a price change and other changes; and most importantly, these changes help maintain a price equilibrium.

• The idea of market failure is based on a slew of economic studies that favour government involvement in markets for services and goods and support government production. 

• A market failure happens when individuals inside a group find themselves in a worse situation than they would have been if they behaved around their own best interests.

• Market failure could happen because of the market system's structure. Because of a shortage of public commodities, incompetent manufacturers, environmental challenges and external forces, markets cannot be ideal in the real world.

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