Define Market Failure
What are the major reasons that a free, unregulated market in medical care might not be optimal?
Proponents of a government-run health care system argue that the market does not work well in the medical care industry. What evidence do they use to support this claim?
Explain how market failure can be used to justify government intervention in medical care markets?
Markets are the institutions where the exchange of goods and services among individuals’ collective agents take place. Market failure, in economic terms, refers to a situation wherein the free market fails to efficiently allocate the goods and services. Markets failure mostly occur when there is under or over allocation of resources of production, relative to the best interest of the society such as abuse of monopoly power, existence of externalities among other serious factors that will be considered in this discussion.