Can markets always reach equilibrium and determine what the price of a product and its quantity demanded and supplied should be?

Marketing Dec 25, 2020

Expert Solution

The answer to, "Can markets always reach equilibrium and determine what the price of a product and its quantity demanded and supplied should be?" is No.

Markets can and do sometimes fail. Market failures occur when the market does not allocate resources optimally. The failure can be complete or partial. An example of a partial market failure would be when you go to the store to purchase a product on sale and they have run out of inventory. A complete market failure would be not providing any goods that don't generate revenue and profit, such as public parks or highways. When there is a complete market faillure, government must intervene.

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