Market failure and information failure
- Created by: Jade
- Created on: 01-12-12 14:00
Other questions in this quiz
2. Which of these is NOT an example of information failure?
- Where consumers make rational decisions to maximise welfare
- Where consumers are not aware of the benefits and, in some cases, the harmful effects of consuming a particular product
- Where persuasive advertising results in consumption levels that are not in the best interest of consumers
- Where product packaging makes claims that are inaccurate or misleading
3. Which of these is NOT an example of asymmetric information?
- Environment
- Tobacco and alcohol product packaging and information
- Consumer purchases e.g. mobile phone contracts
- Healthcare
4. What is market failure?
- Market failure is when a market fails to provide the goods and services in the amount most wanted by consumers
- Market failure is where the free market mechanism fails to meet economic efficiency with the result of an inefficient use of scarce resources
- Market failure is where a market fails to meet productive efficiency with the result of a less than socially optimum allocation of resources
5. What is asymmetric information?
- Asymmetric information is information shared equally between two parties carrying out a transaction
- Asymmetric information is information not equally shared between two parties carrying out a transaction
- Asymmetric information is a lack of information resulting in consumers and producers making decisions that do not maximise welfare.
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