Final answer:
Market failure typically happens when there is inadequate competition, inadequate information, or resource immobility, disrupting the efficient allocation of goods and services in the market.
Step-by-step explanation:
Market failure occurs when a market does not efficiently allocate goods and services, usually because one of the following conditions is not met: adequate competition, adequate information, resource immobility, and externalities. Inadequate Competition
When competition among producers is limited, it can lead to monopolies or oligopolies where a single or a few entities control the market, leading to higher prices and less innovation. This lack of competition stifles the efficiency of markets. Inadequate Information
The market requires buyers and sellers to be well-informed. Without adequate information, consumers cannot make informed decisions, which can result in poor product choices and market inefficiencies. Resource Immobility
If the factors of production (land, labor, capital, entrepreneurs) cannot move freely to where they are needed, the market fails to meet demands adequately, resulting in inefficiencies like unemployment in one region and labor shortages in another.