Why the immobility of factors of production can lead to market failure
Factor immobility means workers or capital cannot easily move to where they are needed most. This stops markets from allocating resources efficiently, causing market failure.
Real World
When the UK coal industry collapsed in the 1980s, miners in South Wales could not easily retrain as software engineers or relocate to London — occupational and geographical immobility left labour stranded in depressed regions for decades.
Exam Focus
Name both types of immobility (geographical and occupational) and link each explicitly to resource misallocation and structural unemployment.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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