What can we say about the problem of asymmetric information
A)It always arises from government intervention in private markets.
B)It serves as a possible rationale for government intervention in private markets.
C)It always amounts to a moral hazard problem.
D)It does not affect prices consumers are willing to pay in the market.

Question

Quizplus · Accepted Answer

Asymmetric information occurs when one party in a transaction knows more information than the other party. This can lead to market failure and inefficiencies, and serves as a rationale for government intervention in private markets to ensure transparency and fairness. It is not always a moral hazard problem, nor does it necessarily arise from government intervention. It can affect prices consumers are willing to pay in the market, as they may be hesitant to purchase goods or services with incomplete or uncertain information.

What Can We Say About the Problem of Asymmetric Information