A market failure that causes overconsumption of a product because the sellers know something negative about a product that the buyers do not know is called
A) imperfect information.
B) collusion.
C) regulatory capture.
D) deadweight loss.

Question

Quizplus · Accepted Answer

Imperfect information occurs when either the buyer or seller has more information about a product than the other, which can lead to market failures such as overconsumption or underconsumption. In this case, sellers withhold negative information about a product to induce buyers to purchase more than they otherwise would.

A Market Failure That Causes Overconsumption of a Product Because