Which of the following is an example of asymmetric information?
A)A student adopting unfair means to complete his/her assignment.
B)A commodity trader buying goods at a low price and selling them off at a high price.
C)A builder selling houses built on property that is zoned for industrial use.
D)A buyer paying a pre-contracted price which is lower than the current market price.

Question

Quizplus · Accepted Answer

Asymmetric information refers to a market situation where one party has more information than the other party. In this case, the builder has more information about the zoning of the property than the buyer, and is selling houses built on industrial property with the expectation that the buyer is unaware of the zoning. This creates an informational imbalance that may lead to a market failure. The other choices do not necessarily involve asymmetric information.

Which of the Following Is an Example of Asymmetric Information