The correct answer is 'Option B'.
When one party possesses more information about the good than the other party that is involved in trade then there is asymmetric information. To eliminate the problem of asymmetric information, both parties i.e. the buyer and the seller must have complete and equal information about the good. So, there is asymmetric information in the case discussed here. Therefore, the correct answer is 'Option B'.
If one side of the market, either the buyer or seller of a good or service...
1. Suppose a market has only one seller and only one buyer of a good in the market. The buyer is willing to pay $50 for the good and the seller is willing to accept $15. The market price of the good is determined at $30. If they trade, the social surplus will be ________. A) $15 B) $35 C) $45 D) $65 2. Many industry-wide studies of the elasticity of demand for cigarettes (an industry dominated by a few...
42. Suppose a market has only one seller and only one buyer of a good in the market. The buyer is willing to pay $50 for the good and the seller is willing to accept $15. The market price of the good is determined at $30. If they trade, the social surplus will be ____ A) $15 B) $35 C) $45 D) $65 15. There are 5 ship manufacturers in Polonia and each firm faces a downward sloping demand curve....
How can the existence of asymmetric information provide a rationale for government regulation of financial markets? a). good information becomes quickly obsolete, b). the production of information to combat these asymmetries is subject to moral hazard, c). the production of information to combat these asymmetries is subject to the free-rider problem, d). the production of good information is so costly that all potential buyers of the information are priced out of the market.
Performance obligations are distinct if: A. The seller regularly sells the good or service separately. B. A buyer could use the good or service on its own. C. A buyer could use the good or service in combination with goods or services the buyer could obtain elsewhere. D. All of the other answers is correct
Name a good or service that results in a positive OR negative externality. How does it affect third parties? (Remember, third parties are someone other than the buyer or seller!)
good with an external benefit (positive externality) is a market ________ because__________.a.bonus // many people are benefiting other than simply the buyer of the good.b.failure // too many people are buying the good for economic efficiencyc.failure // too few people are buying the good for economic efficiencyd.bonus // free riders increase the value of the good
1. Because of ______, the market will provide ______ the socially optimal level of information. A. The credibility problem; more B. The problem of adverse selection; less C. moral hazard; more D. The free-rider problem; less 2. If technological developments increase the marginal product of labor, then the: A. Supply of labor will increase. B. Demand for labor will decrease. C. The equilibrium wage rate will decrease. D. Demand for labor will increase.
A tax increase can be shared by the buyer and the seller of a good. a.true b.false The pricing of products in the oligopoly market is unlike the pricing in the monopolistically competitive market. a.true b.false Markets allow people to exchange goods and services. a.true b.false There is only one theory that explains oligopoly. a.true b.false The monopolist’s two major constraints are related to ________ and _________. a. profit; loss b. cost; demand c. number; closeness of substitutes d. price;...
Refer to the Figure 4 matrix of payoffs for honest dealing by the seller and trusting behavior by the buyer. Figure BUYER Trust Doesn't Trust Honest (150, 150) (0, 200) Dishonest (250, -50) (50, 50) SELLER From the information in the matrix, we can deduce Select one: O a. The seller has an incentive to be dishonest toward the buyer while the buyer has an incentive not to trust the seller. N O b. The seller has an incentive to...
who is the buyer or seller ? you are an accounting student at Berkeley College and will not graduate for another year. But because of your excellent grades so far, you have been able to land a job in the purchasing department of a retailer. One of the purchasing agents in your company is negotiating for the receipt of a very large order of uninsured goods from a supplier. The purchasing agent is able to get a better deal on...