The Market Failure Term Paper Example | Topics and Well Written Essays - 2000 words - 1

The Market Failure - Term Paper Example A healthy market is one which acquires a balance between supply and demand. When an imbalance occurs between supply and demand, the market may consider as going through the failure phase. The market is not an absolute entity. It undergoes relative changes every time because of its association with so many internal and external parameters. In other words, the market fluctuates all the time when any problems may arise to the associated entities of the market. The market often fails when the individual interests try to dominate over the general interests of the market. For example, China is accused of implementing unhealthy strategies in the market. China is concentrating on mass productions of goods. They were able to sell their goods for cheaper prices because of the mass production. The cheaper prices will definitely attract the consumers and they will purchase more and more goods of Chinese origin. Even though the profit obtained from selling a single unit may less, China was able to overcome such problems by selling huge volumes of goods. Moreover, the huge volume of production may mobilize the economic resources of China and also the unemployed youths in China may get more employment because of the healthy movement of Chinese products in the world market. On the other hand, the consumers who purchased cheaper goods of Chinese origin may realize later that the goods they purchased were not adequate quality. When they face troubles with the products they purchased, they would try to look suspiciously at other genuine products also produced by other manufacturers. The reluctance of the consumers to enter actively in the market may cause problems not only for China but for other countries as well. In short, the market may fail in such cases because of the inefficient production and distribution of goods by even a single entity.