Imperfect Information on the Part of Buyers and Sellers

question 170

Multiple Choice

Imperfect information on the part of buyers and sellers

• A) will not stop the economy from achieving market efficiency, assuming the other conditions for market efficiency hold.
• B) is no longer a problem because the "truth-in-advertising" regulations have been instituted.
• C) remains a barrier to achieving market efficiency, at least in some industries.
• D) cannot persist in a market economy.

---

Definitions:

Equity Method

An accounting technique used to record an investor’s proportional share of an associate company’s profits or losses on its financial statements.

Fair Value Enterprise Method

An approach to valuing a business by estimating the present value of foreseeable future earnings and the net asset value.

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee but does not have full control.

Dividends

A portion of a company's earnings distributed to its shareholders, typically in the form of cash payments or additional shares.