Which of the following occurs when private information is a market problem?
A)Low trust levels lead to a lower quantity than would be efficient.
B)Excessive trust levels lead to a higher quantity than would be efficient.
C)Exploitation leads to more producers than would be desirable.
D)Overproduction leads to lower prices than would be desirable.

Question

Quizplus · Accepted Answer

When private information is a market problem, it means that some market participants have access to information that others do not, creating an information asymmetry. This can lead to low levels of trust between buyers and sellers, with buyers being wary of purchasing a product that may not be as advertised. This leads to a lower quantity being sold than would be efficient, as buyers are unable to distinguish between high and low-quality products.

Which of the Following Occurs When Private Information Is a Market