Markets and Market Failure

Markets and Market Failure

In the AQA course this is the first AS module. It covers the basic concepts of scarcity and choice, briefly looks at the non-market based solutions to these problems and then considers the market system in more detail. It then moves on to look at how the market fails and the various solutions.

 

Government failure happens when the government intervenes to correct for a particular market failure but for various reasons ends up making the situation worse. It is an important concept when it comes to evaluating the effectiveness of government intervention.
Demand and supply are the foundation of AS micro and form part of unit 1 in the AQA specification. Demand is determined by the consumers' ability and willingness to pay for a good or service. Supply by producers' costs. Where these intersect determines the equilibrium or market clearing price.