Asymmetric information is a problem that
A)always arises from government intervention in private markets.
B)serves as a possible rationale for government intervention in private markets.
C)always amounts to a moral-hazard problem.
D)forced economists to break the field of economics into two sub-fields: microeconomics and macroeconomics.

Question

Quizplus · Accepted Answer

Asymmetric information refers to a situation where one party in a transaction has more information than the other party. This leads to the potential for one party to take advantage of the other. It is a problem that can arise in both private and government markets. Government intervention can be a possible solution to address the information asymmetry and protect consumers.

Asymmetric Information Is a Problem That