Information Problems Create Inefficient Outcomes in

question 188

Multiple Choice

Information problems create inefficient outcomes in

• A) the private sector but not the public sector.
• B) the public sector but not the private sector.
• C) neither the private nor the public sector.
• D) both the private and the public sectors.

---

Definitions:

Barriers

Obstacles that prevent or hinder entry into a market or the pursuit of certain activities, which can be economic, legal, technical, or natural in nature.

Allocative Efficiency

A state of the economy in which production represents consumer preferences; every good or service is produced up to the point where the last unit provides a benefit to consumers equal to the cost of producing it.

Productive Efficiency

A state where goods and services are produced at the lowest possible cost and resources are utilized in the most efficient way.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.