Why Do Markets Need Social Ties

question 26

Multiple Choice

Why do markets need social ties?

• A) to maintain alliances of kinship and friendship
• B) to maintain levels of trust necessary to carry out economic transactions
• C) to facilitate repeated transactions
• D) to diminish the influence of random, one-shot transactions on market exchanges

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Definitions:

Information Asymmetry

A situation where one party in a transaction has more or superior information compared to another.

Technological Progress

The advancement of technology, leading to improved methods, products, or processes that enhance productivity and efficiency.

Rising Wages

An economic condition where the average wage level in an economy increases over time, potentially affecting inflation and purchasing power.

GDP

Gross Domestic Product (GDP) measures the total economic output of a country within a given time period, reflecting the overall health of its economy.