In Markets with Incomplete Information, Middlemen Tend to ________ Total

question 56

Multiple Choice

In markets with incomplete information, middlemen tend to ________ total economic surplus by ________.

• A)reduce; raising prices
• B)reduce; giving misleading information
• C)increase; raising prices
• D)increase; matching sellers with buyers who have high reservation prices

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Definitions:

ACP

Average Collection Period, indicating the average number of days it takes for a company to receive payments from its customers.

Credit Policy

A set of guidelines a company follows to determine credit terms for customers, including who is granted credit and the terms of payment.

Credit Sales

Transactions where goods or services are sold to a customer with the agreement that payment will be made at a later date.

Zero Balance Accounts

Bank accounts that maintain a balance of zero by automatically transferring funds to cover charges or replenishing from another account.