Which of the Following Statements About Asymmetric Information Is True

question 88

Multiple Choice

Which of the following statements about asymmetric information is true?

• 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 reduces market failures because it makes it easier for individuals to engage in transactions that in the presence of perfect information would take place.
• C) Asymmetric information can only be solved through government intervention.
• D) Asymmetric information occurs only in the market for used cars and in the insurance market.

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Definitions:

Repayment Plan

An agreement between a borrower and a lender outlining how the borrower is to repay outstanding debts, often including terms for monthly payments and interest rates.

Debtor

An individual or entity that owes money to another called the creditor.

Involuntary Filings

Legal proceedings initiated by creditors against a debtor who fails to pay owed debts, often leading to bankruptcy.

Steady Income

Regular and consistent earnings from employment, investments, or other sources.