is poverty a market failure 
poverty is considered to be a result of market failure when a recession hits the poverty rate increases because employees lose their jobs or lose working hours which results in no income or less income inequality which is a component of market failure can eventually lead to poverty when wealth is not distributed equally throughout society this can be remedied with government intervention such as by taxing the wealthy more or incorporating subsidies for those below the poverty level the bottom linemarket failure refers to inefficient allocation of resources in the free market that occurs when individuals acting in rational self interest generate sub optimal economic outcomes these economic inefficiencies may occur in explicit markets where goods and services are exchanged or in implicit markets such as the exchange of favors in the legislative process the causes underlying market failures include negative externalities incomplete information concentrated market power inefficiencies in production and allocation and inequality government intervention such as taxes and subsidies may be effective in solving market failures while other solutions may emerge within the private market or through collective actions 