Market imperfections in an economy are reflected in which of the following conditions?

Introduction / Context:
Real world markets rarely match the ideal conditions of perfect competition. Various imperfections prevent prices and resources from adjusting freely, which can lead to inefficiency and welfare losses. This question asks which features reflect such market imperfections in an economy.

Given Data / Assumptions:

• Market imperfections refer to deviations from the conditions of perfect competition.
• Price rigidity means that prices do not adjust quickly to changes in demand or supply.
• Factor immobility means that labour and capital cannot easily move between regions or sectors.
• Lack of specialisation suggests that resources are not allocated to tasks where they are most efficient.

Concept / Approach:
Perfect competition assumes many buyers and sellers, free entry and exit, perfect information, homogeneous products and full mobility of factors. When these conditions fail, markets become imperfect. Price rigidity can prevent markets from clearing quickly. Factor immobility stops labour and capital from moving to where they are most productive. Lack of specialisation implies that comparative advantage is not fully exploited. Each of these factors is a sign of market imperfection. When all are present, the degree of imperfection is even greater.

Step-by-Step Solution:
1. Compare each condition listed with the assumptions of perfect competition. 2. Price rigidity conflicts with the idea that prices adjust freely to balance demand and supply. 3. Factor immobility contradicts the assumption that resources move to their best paying uses. 4. Lack of specialisation means that economies of scale and comparative advantage are not fully realised. 5. Therefore all three conditions are indicators of market imperfections, so the answer is that all are correct.

Verification / Alternative check:
You can verify by thinking about labour markets where workers cannot easily move from low wage regions to high wage regions, or product markets where prices remain fixed for long periods despite demand changes. These situations clearly differ from the textbook model of a perfectly competitive market and show the presence of frictions and rigidities that economists describe as imperfections.

Why Other Options Are Wrong:
Option A, B and C: Each focuses on only one condition and ignores the fact that all the listed conditions are associated with market imperfections.
Option E: It is incorrect to say that none of these conditions is related to market imperfections, because they are widely used examples of real world frictions in economic analysis.

Common Pitfalls:
Students sometimes equate market imperfection only with monopoly or oligopoly and forget that imperfections can arise from information problems, rigidities and institutional constraints. Another mistake is to think that if one assumption of perfect competition fails, the market is completely non functional, but in reality markets can function with varying degrees of imperfection. Exam questions often test your ability to recognise multiple sources of imperfection at the same time.

Final Answer:
All of these conditions together reflect market imperfections