When Buyers and Sellers Are Not Equally Informed About the Characteristics

question 141

Multiple Choice

When buyers and sellers are not equally informed about the characteristics of the good they seek to exchange,information is

• A) of no value.
• B) asymmetric.
• C) of less value than if information were equal.
• D) symmetric.
• E) false.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor expenses.

Preferred Stock

Equity shares that give investors a claim on a company's earnings before dividends are paid to common stockholders, often with no voting rights.

Common Equity

The amount of ownership in a corporation that is held by common shareholders, represented by common stock.

Leverage

The use of borrowed capital or financial instruments to increase the potential return of an investment.