When information asymmetry exists in a market,government:
A) always steps in to try to correct it.
B) never steps in to try to correct it.
C) sometimes steps in to try to correct it.
D) only steps in to correct it if it can ensure complete information.

Question

Quizplus · Accepted Answer

Sometimes government steps in to try to correct information asymmetry in a market, depending on the nature and severity of the asymmetry and the feasibility of correcting it. In some cases, government intervention may involve mandating disclosure requirements or imposing penalties on parties that engage in misleading or fraudulent practices. However, there may be cases where the government cannot ensure complete information, and therefore, may not be able to fully correct the asymmetry.

When Information Asymmetry Exists in a Market,government