Understanding Factor Immobility and Market Failure

The video tutorial explains factor immobility, which can lead to market failure. It covers geographical and occupational immobility, highlighting how factors of production struggle to move between industries or locations. The tutorial discusses the impact of immobility on resource allocation and market efficiency. It also explores potential solutions, such as reducing housing market frictions, providing retraining programs, and implementing regional policies to address these challenges.

What is the primary reason factor immobility can lead to market failure?

• It reduces the availability of raw materials.

• It leads to higher consumer prices.

• It results in a misallocation of resources.

• It causes an increase in production costs.

Which of the following is an example of geographical immobility?

• A machine that cannot be used in another industry.

• A product that is no longer in demand.

• A worker unable to move due to family ties.

• A company that cannot find skilled workers.

What is a common barrier to geographical mobility?

• Insufficient training programs.

• High relocation costs.

• Limited access to technology.

• Lack of job opportunities.

How does occupational immobility contribute to structural unemployment?

• By causing inflation in the economy.

• By increasing the cost of living.

• By preventing workers from changing industries.

• By reducing the number of available jobs.

What is a key characteristic of occupational immobility?

• Workers have industry-specific skills.

• Workers have transferable skills.

• Workers are unable to relocate.

• Workers are highly adaptable.

Why is creative destruction important in the context of market failure?

• It prevents resource misallocation.

• It stabilizes the economy.

• It leads to the creation of new industries.

• It reduces unemployment rates.

What is one solution to reduce geographical immobility?

• Provide relocation subsidies.

• Limit job opportunities.

• Increase housing prices.

• Reduce education programs.

How can governments address occupational immobility?

• By increasing taxes.

• By providing retraining schemes.

• By reducing wages.

• By limiting industry growth.

What is a potential benefit of regional policy?

• It increases the cost of living.

• It encourages businesses to relocate to high unemployment areas.

• It reduces the number of available jobs.

• It limits worker mobility.

Which of the following is a strategy to slow down the decline of struggling industries?

• Provide industry subsidies.

• Increase competition.

• Reduce worker wages.

• Limit technological advancements.