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Market failure is when the quantity of a product demanded by customers is not equal to the quantity given by the supplier. Government failure is when the government makes more problems to the economy while they are trying to fix the problems that already exists.

Yes it would be because wherever there is a shift in demand and supply, the consumer behavior toward the resource will also change accordingly. The efficient allocation of scarce resources is dependent on private consumption productions decisions or both at the market equilibrium price. In the market system resource allocation is heavily dependent on the variations of the price of the resource itself. Price is the signal for the consumer and the seller within the market.

Some of the problems are high risk loans where major financial institutions such as investment banks, securities firms, insurance companies may inflict serious damage upon the economy.


Market failure is defined as, “to describe the situation where there is no reason to believe that that markets will fail to achieve the conditions implied by idealized economic efficiency. Whereas government failure is defined as, “is present when political choices lead to outcomes that conflict with the efficient allocation of resources”. So basically the market failure happens when individual customers occurs when there is a belief that the market on a specific product or service cannot fail, and then it does. The government failure occurs when a business goes under when politically funded, and backed, while assuring the public that the business will be in business for years to come.

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