Government action in cases of asymmetric information may not be an ideal solution because
A)the private market can sometimes deal with information asymmetries on its own.
B)the government tends to have more information than private parties.
C)both (a) and (b).
D)None of the above is correct.

Question

Quizplus · Accepted Answer

While the government can intervene in cases of asymmetric information (such as through regulations, disclosure requirements, or subsidies), it may not always be the most efficient or effective solution. In some cases, private market mechanisms (such as reputation, certification, or warranties) may be able to address information asymmetries. Additionally, the government may not always have more information than private parties, and may struggle to keep up with the constantly-evolving information landscape.

Government Action in Cases of Asymmetric Information May Not Be