Why does inefficiency in allocation of resources arises in the market? what steps should be taken by the government for removing these inefficiencies through its budgetary policy?


In response to first part of your query, inefficiency in the allocation of resources arises in the market because resources are also given in a higher quantity to the private producers whose aim is to maximise the profit, while, ignoring the areas of social welfare.

In response to second part of your query, the same has been covered in our study material under the topic 'Objectives of Budget'- 'c' point- 'Reallocation of Resources'. Refer to the following link to view the same.


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