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What is market failure and how does it affect the economy?

Answer:
Market failure occurs when there is a mis-allocation of resources that leads to a loss in welfare for the society.
Market failure may not necessary harm the economic growth (examples include cigarette) but most of the time, it harms economic development (due to the loss in welfare.) and ultimately costs the consumers as the whole.
First answer by Randhill. Last edit by Randhill. Contributor trust: 17 [recommend contributor recommended]. Question popularity: 3 [recommend question].

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