All of the Following Statements About Asymmetric Information Are True

question 59

Multiple Choice

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 creates market failures because it makes it harder for individuals to engage in transactions that would take place in the presence of perfect information.
• C) asymmetric information can only be solved through government intervention.
• D) asymmetric information occurs in the market for used cars and in the insurance market.

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Definitions:

Fixed Costs

Costs that do not change with the level of output produced, such as rent, salaries, and insurance premiums.

Birthday Cakes

Specialized cakes decorated and made to celebrate a person's birthday.

Boat Tours

Guided excursions on boats or ships designed to provide passengers with leisure, entertainment, and the opportunity to explore waterways and coastal areas.

Fuel

A material that is used to produce energy, especially by combustion, to generate power or as a source of heat.