Lesson Plan

• Define market failure and explain why it occurs.
• Identify the main types of market failure (externalities, public goods, information asymmetry, market power).
• Analyse how market failure creates a gap between marginal benefit and marginal cost.
• Evaluate appropriate government interventions to correct each type of market failure.

• Projector and screen
• Whiteboard and markers
• Printed handout with the summary table of market failures
• Supply‑and‑demand diagram showing a negative externality
• Worksheet for group case‑study activity
• Sticky notes for exit‑ticket responses

Begin with a quick question: “Can you think of a product that caused problems for people who weren’t part of the purchase?” Use this hook to link to students’ prior knowledge of supply‑and‑demand and the MB = MC condition. Explain that today they will discover why such situations indicate market failure and what criteria they will be judged on.

1. Do‑now (5') – short quiz on marginal benefit vs. marginal cost.
2. Teacher input (7') – present a concise definition of market failure and why it matters.
3. Diagram analysis (10') – display the supply‑and‑demand graph with a negative externality; students label MB, MC, SMC, and discuss over‑production.
4. Group activity (12') – each group receives a type of market failure, creates a real‑world example, and proposes a suitable government intervention.
5. Class share (8') – groups present; teacher highlights key characteristics and corrects misconceptions.
6. Summary table review (5') – quick reference to the five failure types and their traits.
7. Exit ticket (3') – students write one policy action that could fix a chosen failure.

Recap the definition of market failure and the four main categories covered. Collect exit tickets to gauge understanding, and assign homework: research a local example of market failure and write a brief paragraph describing the issue and a possible government response.