The Problem of Asymmetric Information Is That

question 5

Multiple Choice

The problem of asymmetric information is that

• A) neither health care buyers nor providers are well-informed.
• B) health care providers are well-informed, but buyers are not.
• C) the outcomes of many complex medical procedures cannot be predicted.
• D) insurance companies are well-informed, but policy purchasers are not.

---

Definitions:

Principal

In legal and financial contexts, the original sum of money loaned or invested, before interest; in agency, the person or entity who authorizes an agent to act on their behalf.

Specific Authority

Power or permission given to an agent for specific tasks or transactions on behalf of the principal.

Necessarily Incidental

Activities or actions that are not central but are unavoidably part of or related to accomplishing a main activity or goal.

Borrow Money

The act of receiving funds from another party with the promise to return the principal amount along with potential interest.