Use the following statements to answer this question: I. Incomplete information may lead to economic inefficiencies if consumers do not understand the complete set of benefits associated with a particular product.
II) Market power can lead to economic inefficiency, but only if the power is held by sellers and not by buyers (e.g., monopsony).
A) I and II are true.
B) I is true and II is false.
C) II is true and I is false.
D) I and II are false.

Question

Quizplus · Accepted Answer

I is true because incomplete information can indeed lead to economic inefficiencies, as consumers might make suboptimal choices without full knowledge. II is false because market power, whether held by sellers (monopoly) or buyers (monopsony), can lead to economic inefficiencies.

Use the Following Statements to Answer This Question: I