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

The scenario describes a situation where all parties did not have perfect information about the market trends (increase in low carbohydrate diets) that would affect Mom's Bakery's sales and subsequently its ability to repay the loan. Lack of perfect information in financial markets means that not all parties have all the relevant information to make fully informed decisions.

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