8.6

• Symmetric information definition

  Consumers and produced have perfect market information to make their decision. Leads to an efficient allocation of resources
• asymmetric information definition

  when there’s unequal knowledge between consumers and producers. leads to market failure
• what does imperfect information lead to?

  misallocation of resources leading to wrong quantity of goods provided
• asymmetric information can be linked with the principal-agent problem - agents make decisions for principals but agent inclined to act in their own interest rather than principals
• How can information be made more available?

  Advertising or government intervention
• immobility of labour definition

  inability of labour to move from one job to another, either for occupational reasons (e.g need for training) or for geographical reasons (e.g cost of moving to another part of the country)
• monopolies are likely to restrict market output and raise prices in the pursuit of excess profits, leading to consumer exploitation and market failure
• occupational immobility examples

  • need for training - too costly for firms
  • need to gain professional qualifications
  • lack of government regulation of foreign qualifications
• geographical immobility example

  labour may find it hard to find work due to family or social ties, financial costs with moving
• how may the government want to protect domestic workers from excessive competition?

  choose to not recognise foreign qualifications
• immigration laws, which prevent workers moving to counties, causes immobility of labour
• occupational and geographical factors lead to unemployment and a waste of resources (labour) contributing to market failure