Economics GCSE
Market Failure
What Market Failure means in Economics GCSE, as defined for Pearson Edexcel.
Definitions of Market Failure
Exam boards and our study guides word this term in slightly different ways. Learn the version your board uses.
A situation where the free market mechanism fails to allocate resources efficiently, leading to a net loss in social welfare.
A situation where the free market mechanism fails to allocate resources efficiently, leading to a net loss of social welfare.
Topics that use Market Failure
- Externalities (Pearson Edexcel GCSE)
- The mixed economy (Pearson Edexcel GCSE)
Related terms
- Externality
- Private Cost
- Third Party
- Internalising the Externality
- Merit Good
- Mixed Economy
- Private Sector
- Public Good
Using Market Failure in the exam
Definition questions usually carry one or two marks, and examiners look for the precise wording. Write the definition from memory, check it against the version above, and then use the term in a longer answer on the same topic so it sticks.
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