Which of the Following Relationships Involves Asymmetric Information

question 43

Multiple Choice

Which of the following relationships involves asymmetric information?

• A) An employee knows more than his employer knows about his work effort.
• B) A borrower knows more than the lender about his ability to repay the loan.
• C) The seller of a 30-year-old house knows more than the buyer about the condition of the house.
• D) All of the above are correct.

---

Definitions:

Locally Installed Software

Software that is installed on your device’s internal storage.

Vertical Market Software

Software that’s developed for and customized to a specific industry’s needs (such as a wood inventory system for a sawmill) as opposed to software that’s useful across a range of industries (such as word processing software).

Application Software

The set of programs on a computer that helps a user carry out tasks such as word processing, sending e-mail, balancing a budget, creating presentations, editing photos, taking an online course, and playing games.

Adobe Photoshop

A software application for image editing and photo retouching for use on Windows or MacOS computers, developed by Adobe Systems.