Which of the Following Does Not Illustrate the Asymmetric Information

question 109

Multiple Choice

Which of the following does not illustrate the asymmetric information problem?

• A)Ordinary financial investors do not know the motivations of financial advisers.
• B)Ordinary customers do not know how sanitarily the food is prepared in a restaurant.
• C)Ordinary stock buyers do not know what will happen to the stock's price next week.
• D)Ordinary car buyers do not know the actual quality of the various cars in the dealer's lot.

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Definitions:

Income

Financial gain derived from various sources such as employment, investments, or proprietorship, contributing to an individual's wealth.

Price

The monetary cost anticipated, called for, or disbursed in payment for an object.

Compensating Variation

An economic concept representing the amount of additional income an individual would need to maintain the same level of utility after a price change.

Utility Function

A mathematical representation used in economics to model the satisfaction or benefit a consumer derives from consuming goods and services.