Which of the following are common economic problems caused by asymmetric information? I. Moral hazard
II) Public debt
III) Adverse selection
IV) Resource cost
A) I and II only
B) I and III only
C) III and IV only
D) I, II, III, and IV

Question

Quizplus · Accepted Answer

Asymmetric information refers to a situation in which one party in a transaction has more or better information than the other party. This can lead to various economic problems such as moral hazard and adverse selection. Public debt and resource cost are not necessarily caused by asymmetric information. Therefore, only options B (I and III only) covers the common economic problems caused by asymmetric information.

Which of the Following Are Common Economic Problems Caused by Asymmetric