Which of the Following Is an Example of Informational Asymmetry

question 47

Multiple Choice

Which of the following is an example of informational asymmetry?

• A)A seller of a house knows more about its true condition than does a potential buyer.
• B)A salesperson knows more about her efforts than does her manager.
• C)A child knows more about how much time he spent playing video games while he was alone in his bedroom than do his parents.
• D)All of the above are correct.

Interpret the need for sustainability and external monitoring in modern management practices.

Understand the importance of developing, supporting, and empowering employees as part of successful management.

Recognize the significance of task-related activities, including planning, setting objectives, and monitoring performance in management.

Understand the variety of skills successful managers utilize in different scenarios.

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Definitions:

Vest

To bestow a right, immediate or future, for the ownership of (an asset, typically a stock or option) to a worker under a plan, which may be subject to conditions.

Current Liability

Financial obligations or debts that are due to be paid within a year or within the normal operating cycle of a business.

GAAP

Stands for Generally Accepted Accounting Principles; the standard framework of guidelines for financial accounting used in any given jurisdiction, including the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements.

Compensated Absences

Employee benefits representing paid time off, such as vacation, sickness, or personal leave, accrued by employees.