Mom's Bakery goes out of business due to decreasing sales resulting from the dramatic increase in people on low carbohydrate diets.The decrease in business also results in Mom's defaulting on the loan they have with the bank.This is an example of:

Question

Quizplus · Accepted Answer

Lack of perfect information in financial markets occurs when one party to a transaction has more information than the other party. In this case, the bank did not have perfect information about Mom's Bakery's financial situation, which led to the bank making a bad loan decision.

Mom's Bakery Goes Out of Business Due to Decreasing Sales