The government can help solve the information asymmetry problem by:
A) telling less-informed parties not to participate in the market.
B) excluding those who do not have complete information from the market.
C) making markets illegal where information asymmetry is significant.
D) requiring the more informed party to reveal the missing information.

Question

Quizplus · Accepted Answer

Requiring the more informed party to reveal the missing information is the most effective way for the government to solve the information asymmetry problem. This way, all parties have access to complete information and can make informed decisions, resulting in a fairer and more efficient market. Option A and B would result in a loss of potential participants in the market, limiting its potential benefits. Option C is not a viable solution as it would lead to a reduction in economic activity and overall welfare.

The Government Can Help Solve the Information Asymmetry Problem By