Economic goods satisfy human wants and provide utility. Goods are scarce and require resources to produce. Free goods like air have unlimited supply
Market failure occurs when free market allocation is not Pareto efficient. Term first used by economists in 1958, traced back to Sidgwick. Market failures often result from public goods, externalities, or information asymmetries
Market failure occurs when supply and demand are not equal in a free market. Prices are determined by supply and demand forces in a typical market
Public goods are non-excludable and non-rivalrous goods that everyone can benefit from. Government provides public goods when private firms cannot meet market demand. Public goods are almost always funded through government taxation
Market failure occurs when resources are distributed inefficiently in free markets. Externalities affect third parties through pollution or other negative effects. Information failure arises when participants lack necessary market information. Market control by monopolies or oligopolies disrupts supply-demand balance. Public goods are non-excludable and non-rival, requiring government intervention
Public goods are available to all society members without reducing their availability. They must be non-rivalrous and non-excludable. Government provides public goods through taxes