Answer to Question #221531 in Macroeconomics for Robert

Question

With the aid of a diagram, show that under imperfect market structure, the market fails to achieve Parato efficiency and general welfare?

Answer 1

Imperfect information in the market. Market failure may also result from the lack of appropriate information among the buyers or sellers.The lack of information on the buyer's side may mean that the buyer may be willing to pay a higher or lower price for the product because they don't know its actual benefits.