under perfectly competitive (free) markets, welfare is maximised and resource allocation is efficient. However, when there is a market failure, this...

under perfectly competitive (free) markets, welfare is maximised and resource allocation is efficient. However, when there is a market failure, this result no longer holds. Choose an example of a market failure and provide a definition. Explain why the market failure you chose, will result in reduced welfare and/or a misallocation of resources. Use examples to support your argument.