Where there is asymmetric information between buyers and sellers,
A) product shortages will occur at the equilibrium price.
B) product surpluses will occur at the equilibrium price.
C) markets can produce ineﬃcient outcomes.
D) markets will fail due to the over-allocation of resources.

Question

Quizplus · Accepted Answer

Whenever there is an asymmetric information between buyers and sellers, markets can produce inefficient outcomes because the uninformed party may end up making choices that they would not have made if they had information, leading to market failure.

Where There Is Asymmetric Information Between Buyers and Sellers