1) Why is there a market failure in the 401(k) market? Write 2 paragraphs (Hint: read chapter...

1) Why is there a market failure in the 401(k) market? Write 2 paragraphs (Hint: read chapter 8 and its description of imperfect information)

Expert Solution

Market failure can occur in implicit markets as favours and special treatment are exchange such as election or the legislative process. Market failure can occur when individual acting in in rational self interest produce a less than optimal or economically inefficient outcome. Market failure include externalities, monopoly, information asymmetries, and factor immobility.public good create market failure if some consumer decide not to pay but use the good anyway.

Market failure can be solved using private market solutions government imposed solutions or voluntary collective actions. Governments can enact legislation as a response to market failure. Government can also impose taxes and subsidies as possible solution. Subsidies can help encourage behaviour that can result in positive externalities. Where is taxation can help cut down negative behaviour. Private collective action is often employed as a solution to market failure

Rahul Sunny answered 2 years ago

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