The term that is used to refer to a situation in which one party to an economic transaction has less information than the other party is

Question

Quizplus · Accepted Answer

Asymmetric information refers to a situation where one party in an economic transaction has more information than the other party, leading to an imbalance of power and potential market failure. A is incorrect as the efficient market hypothesis refers to the idea that markets quickly and accurately incorporate all available information. B is incorrect as moral hazard is a situation in which one party in an economic transaction takes risks because they know they will not bear the full consequences of their actions. C is not a widely used term in economics.

The Term That Is Used to Refer to a Situation