Question 1

Information asymmetry is present when:

Accepted Answer

A) one person knows more than another. 
B) there is risk in an exchange. 
C) both parties are lacking the same information. 
D) All of these statements are true. 
A) one person knows more than another. 
B) there is risk in an exchange. 
C) both parties are lacking the same information. 
D) All of these statements are true.

Question 2

When parties attempting to enter into an agreement lack information:

Accepted Answer

A) they should always gain more information before making a decision. 
B) the cost of acquiring information is sometimes prohibitive. 
C) an exchange will never happen. 
D) the exchange will happen, but surplus is unlikely to be maximized. 
A) they should always gain more information before making a decision. 
B) the cost of acquiring information is sometimes prohibitive. 
C) an exchange will never happen. 
D) the exchange will happen, but surplus is unlikely to be maximized.

Question 3

Which of the following is an example of statistical discrimination?

Accepted Answer

A) Auto insurance providers charge higher premiums to drivers of cars that are more likely to be stolen. 
B) The government mandates that all drivers must have auto insurance. 
C) Auto insurance providers offer perks to customers who have been with the provider for a longer period of time. 
D) All of these are examples of statistical discrimination. 
A) Auto insurance providers charge higher premiums to drivers of cars that are more likely to be stolen. 
B) The government mandates that all drivers must have auto insurance. 
C) Auto insurance providers offer perks to customers who have been with the provider for a longer period of time. 
D) All of these are examples of statistical discrimination.

Question 4

Generalizing using statistical discrimination is:

Accepted Answer

A) an irrational response and always leads to loss of surplus. 
B) a rational response to being on the wrong end of an information asymmetry. 
C) a rational response, although government always steps in to prevent it. 
D) All of these are true. 
A) an irrational response and always leads to loss of surplus. 
B) a rational response to being on the wrong end of an information asymmetry. 
C) a rational response, although government always steps in to prevent it. 
D) All of these are true.

Question 5

When a transaction takes place repeatedly, one way to avoid information asymmetry is:

Accepted Answer

A) building a reputation. 
B) screening. 
C) statistical discrimination. 
D) All of these are ways to avoid information asymmetry in repeated transactions. 
A) building a reputation. 
B) screening. 
C) statistical discrimination. 
D) All of these are ways to avoid information asymmetry in repeated transactions.

Question 6

Which of the following is a case of asymmetric information?

Accepted Answer

A) The buyer and seller of a used car don't know how long the car will operate. 
B) A provider of health insurance does not know whether a specific client is a smoker or not. 
C) Neither you nor your home insurance company has perfect information about whether a flood will occur. 
D) None of these are examples of asymmetric information. 
A) The buyer and seller of a used car don't know how long the car will operate. 
B) A provider of health insurance does not know whether a specific client is a smoker or not. 
C) Neither you nor your home insurance company has perfect information about whether a flood will occur. 
D) None of these are examples of asymmetric information.

Question 7

Taking action to reveal private information about someone else is called:

Accepted Answer

A) screening. 
B) signaling. 
C) discriminating. 
D) illegal. 
A) screening. 
B) signaling. 
C) discriminating. 
D) illegal.

Question 8

An important type of information asymmetry is:

Accepted Answer

A) information withholding. 
B) advantage imbalance. 
C) moral hazard. 
D) ethical constraint. 
A) information withholding. 
B) advantage imbalance. 
C) moral hazard. 
D) ethical constraint.

Question 9

All food sold in the United States must have an ingredient list on its packaging. This is an example of:

Accepted Answer

A) screening. 
B) signaling. 
C) regulation and education. 
D) building a reputation. 
A) screening. 
B) signaling. 
C) regulation and education. 
D) building a reputation.

Information asymmetry is present when:

When parties attempting to enter into an agreement lack information:

Which of the following is an example of statistical discrimination?

Generalizing using statistical discrimination is:

When a transaction takes place repeatedly, one way to avoid information asymmetry is:

Which of the following is a case of asymmetric information?

Taking action to reveal private information about someone else is called:

An important type of information asymmetry is:

All food sold in the United States must have an ingredient list on its packaging. This is an example of:

Economics and Life

Specialization and Exchange

Markets

Elasticity

Efficiency

Government Intervention

Consumer Behavior

Behavioral Economics: a Closer Look at Decision Making

Game Theory and Strategic Thinking

Time and Uncertainty

The Costs of Production

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

The Facts of Production

International Trade

Externalities

Public Goods and Common Resources

Taxation and the Public Budget

Poverty, Inequality, and Discrimination

Political Choices

Public Policy and Choice Architecture

Filters

Exam 10: Information

Information asymmetry is present when:

When parties attempting to enter into an agreement lack information:

Which of the following is an example of statistical discrimination?

Generalizing using statistical discrimination is:

When a transaction takes place repeatedly, one way to avoid information asymmetry is:

Which of the following is a case of asymmetric information?

Taking action to reveal private information about someone else is called:

An important type of information asymmetry is:

All food sold in the United States must have an ingredient list on its packaging. This is an example of:

Economics and Life

Specialization and Exchange

Markets

Elasticity

Efficiency

Government Intervention

Consumer Behavior

Behavioral Economics: a Closer Look at Decision Making

Game Theory and Strategic Thinking

Time and Uncertainty

The Costs of Production

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

The Facts of Production

International Trade

Externalities

Public Goods and Common Resources

Taxation and the Public Budget

Poverty, Inequality, and Discrimination

Political Choices

Public Policy and Choice Architecture

Filters