Asymmetric Information Exists When

question 109

Multiple Choice

Asymmetric information exists when

• A) both parties to an exchange have all relevant facts about that exchange.
• B) a good that is either nonrivalrous or nonexcludable is being sold on a market.
• C) the two parties to an exchange differ in what they know about the good being exchanged.
• D) neither party to an exchange is knowledgeable about the quality of the good being exchanged.

---

Definitions:

Workers

Individuals engaged in physical or mental effort aimed at producing goods or providing services in exchange for wages.

Perfect Competitor

A market structure where many firms offer products or services that are similar, allowing for free entry and exit, and no single firm can influence the market price.

Imperfect Competitor

An entity in a market that does not hold enough power to dictate the conditions of the market but can influence the price and output of its goods to some extent.

MRP

Marginal Revenue Product, the additional revenue generated from employing one more unit of a factor of production.