Why Is There an Asymmetric Information Problem in the Market

question 230

Multiple Choice

Why is there an asymmetric information problem in the market for health care?

• A) The patient, not the physician, knows most about the amount and type of health care to be provided.
• B) The government, not the physician, knows most about the amount and type of health care to be provided.
• C) Insurance companies, not the physician, know most about the type of health care to be provided.
• D) The physician, not the patient, knows most about the amount and type of health care to be provided.

---

Definitions:

Corporate Information

Data or knowledge concerning the operations, policies, and management of a corporation, often considered proprietary or confidential.

Rule 134

An SEC rule that allows issuers to communicate certain limited information about a securities offering without it being considered an offer to sell the securities, intended to maintain investor protections while allowing market communications.

Tombstone Advertisement

A brief newspaper advertisement alerting prospective shareholders that an issuer is offering to sell the securities described in the advertisement.

Registration Statement

A set of documents, including financial statements and a prospectus, filed with a regulatory body to register new securities for sale to the public.