If ________ enters into an exchange with another party who has ________ information, there is asymmetric information and adverse selection.
A) a buyer or seller; an equal amount of
B) a buyer or seller; more
C) only a buyer, but not a seller; more
D) only a seller, but not a buyer; more

Question

Quizplus · Accepted Answer

Asymmetric information occurs when one party in a transaction has more or better information than the other party, which can lead to adverse selection. This can happen regardless of whether the party with more information is the buyer or the seller.

If ________ Enters into an Exchange with Another Party Who