Suppose the Government Is Auctioning the Right for a Company

question 59

Multiple Choice

Suppose the government is auctioning the right for a company to mine for gold in a government- owned region of the country. Further suppose that the government has information regarding the amount of gold that is likely to be found in the region, but the companies bidding for the rights do not have this information. This is an example of _______.

• A)screening
• B)asymmetric information
• C)the principal- agent problem
• D)the lemons problem