Private information is an obstacle to
A)company profitability.
B)efficient functioning of markets.
C)moral hazard.
D)risk aversion.

Question

Quizplus · Accepted Answer

Private information creates information asymmetry in markets, where one party has more or better information than the other. This can lead to inefficiencies such as market failure, where goods and services are not allocated efficiently or at the right price. Therefore, overcoming private information is necessary for efficient functioning of markets. Private information may also lead to moral hazard and risk aversion, but these are not direct obstacles to market efficiency.

Private Information Is an Obstacle to