If a Buyer in an Economic Transaction Has More Information

question 162

Multiple Choice

If a buyer in an economic transaction has more information than the seller, the buyer benefits at the expense of the seller.This phenomenon is due to

• A)moral hazard.
• B)adverse selection.
• C)economically irrational behavior.
• D)gains from trade.

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Definitions:

Conflict

A struggle or clash between opposing forces, ideas, or interests.

Synergy

describes a scenario where the combined effort of a group or system results in a total effect greater than the sum of their individual effects.

Zero-Sum

A situation in which a gain for one side necessarily means a loss for the other, making the net change in wealth or benefit zero.

Distributive Bargaining

A negotiation strategy that focuses on dividing a fixed amount of resources, often resulting in a win-lose scenario.