All of the Following Statements About Asymmetric Information Are True

question 59

Multiple Choice

All of the following statements about asymmetric information are true except

• A) asymmetric information occurs when one party to a transaction has relevant information to the transaction that the other party does not have.
• B) asymmetric information creates market failures because it makes it harder for individuals to engage in transactions that would take place in the presence of perfect information.
• C) asymmetric information can only be solved through government intervention.
• D) asymmetric information occurs in the market for used cars and in the insurance market.

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Definitions:

Scanlon Plans

Employee incentive programs focused on cost saving and efficiency, sharing the resulting financial gains with employees.

Profit-Sharing Programs

A company policy where employees receive a share of the firm's profits, typically as a portion of their compensation.

Reward Motivation

The drive to engage in activities that are expected to yield positive outcomes or rewards.

Timeliness

The quality of completing or delivering something within the expected or agreed time.