Market Failure Due to Asymmetric Information Is Illustrated in Which

question 208

Multiple Choice

Market failure due to asymmetric information is illustrated in which situation?

• A) A company sells a product with harmful ingredients. The ingredients are listed on the label in small print.
• B) Consumers seek to buy a product because it tastes good, even though they know that it contains harmful ingredients.
• C) Consumers buy a product labeled as foot cream, but they use it as eye cream even though there is a warning on the label to use it only on feet.
• D) A company does not list all a product's ingredients on the label. Customers buy the product, unaware that it contains harmful ingredients.

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Definitions:

Black Republic

A term that could refer to nations governed by people of African descent, often prominent in discussions of Haiti post its successful slave revolution.

Voting Rights

Legal rights guaranteed to individuals by law to participate in the electoral process, often a topic of historical struggle for marginalized groups.

Slave Rebellion

An act of violent or nonviolent resistance by slaves against their enslavers or slaveholders; its examples include the Haitian Revolution and the Stono Rebellion.

Federal Troops

Military forces deployed by a federal government, particularly referring to units sent to enforce laws in states or territories.