Frequently It Is the Case That: (1) a Worker Knows

question 23

Multiple Choice

Frequently it is the case that: (1) A worker knows more than his employer about how much effort he puts into his job, and (2) the seller of a used car knows more than the buyer about the car's condition.

• A)Neither (1) nor (2) serves as an example of asymmetric information.
• B)Both (1) and (2) serve as examples of asymmetric information.
• C)Neither (1) nor (2) serves as an example of a hidden action.
• D)Both (1) and (2) serve as examples of hidden action.

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Definitions:

Communication Efficiency

The effectiveness with which information is expressed and understood between parties, minimizing misunderstandings and maximizing clarity.

Noise

Unwanted or disruptive sounds or signals that interfere with the communication or processing of information.

Effective Communication

The intended meaning of the source and the perceived meaning of the receiver are identical.

Efficient Communication

The ability to convey information and ideas effectively and clearly with minimal waste of time and resources.