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1) If sellers have more information than buyers this can create a market failure

ID: 1165150 • Letter: 1

Question

1) If sellers have more information than buyers this can create a market failure because:

Buyers can harm the community at large.

Sellers can harm the community at large.

Both buyers and sellers can lose from the exchange.

Sellers can be lied to and cheated by buyers.

Buyers can be lied to and cheated by sellers.

a

Buyers can harm the community at large.

b

Sellers can harm the community at large.

c

Both buyers and sellers can lose from the exchange.

d

Sellers can be lied to and cheated by buyers.

e

Buyers can be lied to and cheated by sellers.

Explanation / Answer

If sellers have information more than buyers turn buyers can be cheated about the product by setting very high price or selling inferior quality product.

Answer-e

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