Asymmetric information is a situation in which ________
a. both buyers and sellers are equally uninformed, and both must invest in search in order to make an informed decision
b. both buyers and sellers are fully informed
c. one side of the market has more reliable information than the other side does
d. one side of the market has identical reliable information as the other side
c
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In order to be binding, a price ceiling
A) must be high enough for firms to earn a profit. B) must coincide with the free market equilibrium price. C) must lie below the free market equilibrium price. D) must lie above the free market equilibrium price.
If Johnny is willing to pay up to $3 for an ice-cream cone but she actually pays $1 for it. The consumer surplus of the ice-cream cone for Johnny
A) is $1. B) is $2. C) is $4. D) cannot be determined without information about the market structure.