Mom's Pizzeria goes out of business due to a dramatic decrease in sales from a local newspaper article highlighting the fact that Mom's Pizzeria has been purchasing expired meat from a distributor at cut rate prices for years. 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

This scenario exemplifies asymmetric information in the financial markets, as the customers were unaware of the fact that Mom's Pizzeria was purchasing expired meat. This information was known only to the distributor and Mom's Pizzeria. This lack of information caused a decrease in sales and ultimately led to the business's closure.

Mom's Pizzeria Goes Out of Business Due to a Dramatic