Which of the Following Reduces the Effects of Asymmetric Information

question 47

Multiple Choice

Which of the following reduces the effects of asymmetric information?

• A) repeat purchases
• B) warranties
• C) building a reputation
• D) All of the above.

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Definitions:

Invisible Hand

A metaphor for the unseen forces that move the free market economy through competition for scarce resources.

Government's Economic Activity

Refers to the various ways governments influence or directly participate in the national economy, including taxation, spending, and regulation.

Economic Efficiency

The optimal allocation of resources to maximize the production of goods and services. Efficiency is achieved when no additional output can be gained without increasing the amount of inputs.

Collective Action Problem

A situation where individuals in a group fail to achieve a common or collective goal because they prioritize their personal interests.