Which of the following arguments supports the view that regulation is not necessary,particularly to the extent that it currently exists?
A) Accounting information is like any other good, and people will be prepared to pay for it to the extent that it has a use.
B) Markets for information are not efficient and therefore produce a sub-optimum amount of information, given the problem of 'free riders'.
C) Investors need protection from fraudulent organisations that may produce misleading information.
D) Information asymmetry exists because not everyone has the same power over resources to obtain the information they need.

Question

Quizplus · Accepted Answer

This argument suggests that the market itself will provide the necessary regulation, as people will only pay for accounting information that they find useful. This implies that government regulation may not be necessary to ensure that companies provide accurate information.

Answer: D
 This argument highlights the issue of information asymmetry, where some individuals or organizations may have an advantage over others in accessing certain information. This suggests that regulations may be necessary to ensure that all parties have access to the information they need to make informed decisions. However, this argument may also be used to support the view that regulation is necessary, as it addresses a market failure that may not be corrected by the market alone.

Which of the Following Arguments Supports the View That Regulation