How does asymmetric information affect market outcomes?
Consider, first, a market with symmetric information. Both buyers and sellers have full information about the good. Look at the demand curve and compare it to a demand curve that would obtain without full information. If the undisclosed information is harmful to the sale of the good (which is why it's undisclosed), then the consumer's demand curve would be positioned to the right of the full-information curve, the result, higher quantity and price. That's market failure.
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Which of the following would make cheating on a collusive agreement more likely?
a. greater ease of observing other firms' prices b. a reduction in the number of sellers in the market c. close monitoring by the Department of Justice d. more frequent shifts in market demand e. an increase in the number of customers in the market
Sam loves cookies. She receives 200 utils for one cookie, 360 for two cookies, 490 for the third, 560 for four cookies, and 600 for five cookies. The marginal utility of the third cookie is
A) 130. B) 490. C) 70. D) cannot be determined.
A country has a trade surplus when
A. its exports exceed its imports. B. its government spending exceeds its tax revenues. C. its exports equal its imports. D. its exports are less than its imports.
What is meant by the tragedy of the commons? Use an example to explain your answer
What will be an ideal response?