Answer: Goods and services not able to be supplied by the private market
The term market failure refers to a situation where the suppliers are not able to supply the quantity of goods demanded by the consumers.
Market Failure occurs when there is inefficient allocation of goods and services. The price of a particular good or service fails to take all the costs and benefits involved into account. Hence the suppliers can’t provide the quantity of good that is demanded.
Market failure can occur because of positive and negative externalities, environmental concerns, lack of production of public goods, abuse of monopoly, underproduction of merit goods and overproduction of demerit goods.
In such cases, the government intervenes and takes steps to remedy the situation.