All of the following statements about asymmetric information are true except
A. asymmetric information occurs when one party to a transaction has relevant information to the transaction that the other party does not have.
B. asymmetric information occurs in the market for used cars and in the insurance market.
C. asymmetric information creates market failures because it makes it harder for individuals to engage in transactions that would take place in the presence of perfect information.
D. asymmetric information can only be solved through government intervention.
Answer: D
You might also like to view...
Explain the influences on the pace of labor productivity growth
What will be an ideal response?
In the United States, the long-run inflation rate can be expressed simply as the growth rate of money
A) plus the long-run growth rate of velocity. B) minus the long-run growth rate of velocity. C) plus the long-run growth rate of real GDP. D) minus the long-run growth rate of real GDP.
Labor specialization can increase production primarily because workers
a. are now supervised more and so have to work harder b. become proficient when they specialize in what they do best c. have to work more hours to buy the things they want d. engage in competitive, rather than cooperative, production e. have to learn how to do every production-related task well
If the opportunity cost of producing wheat in Canada is four buffalo and the opportunity cost of producing wheat in the U.S. is seven sheep then we know that
a. four buffalo must trade for seven sheep b. seven buffalo must trade for three sheep c. we have insufficient information to determine anything about their trade d. the U.S. should specialize in wheat e. Canada should specialize in wheat