Possession of Information by One Party in a Financial Transaction

question 451

Multiple Choice

Possession of information by one party in a financial transaction but not by the other party is

• A) asymmetric information.
• B) symmetric information.
• C) informational hazard.
• D) financial intermediation.

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Definitions:

Standard Labor-Hours

A pre-determined measure of the amount of labor time expected to complete a single unit of production or perform a task, often used in cost accounting.

Standard Amount

A benchmark or norm for measuring performance, often used in budgeting and accounting to set expected costs or outputs.

Variable Manufacturing Overhead

Refers to the production costs that change in proportion to the amount of production output, excluding direct materials and direct labor costs.

Direct Labor-Hours

The total hours worked directly on the manufacture of products, used for assigning labor costs to units of production.