When asymmetric information affects a relationship between two parties, it is always the case that: a. neither party is well inf

Question

3 years ago

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When asymmetric information affects a relationship between two parties, it is always the case that: a. neither party is well inf

ormed. b. one party is better informed than the other party. c. both parties are equally well informed. d. the government is better informed than either of the two parties.

Business

2 answers:

Zina [86] · Answer 1 · 2022-03-31T01:31:43+03:00

Answer:

The correct answer is letter "B": one party is better informed than the other party.

Explanation:

Given a certain market, asymmetric information refers to the fact that buyers and sellers do not have the same amount of information being one party more informed that the other. This causes one of the parties to make a decision that is likely to be different to that if all the information were disclosed equally.

In most cases, sellers take advantage of certain information or tend to manipulate it so inexperienced buyers engage in the purchase process.

ikadub [295] · Answer 2 · 2022-03-31T00:16:36+03:00

Answer:

b. one party is better informed than the other party.

Explanation:

Asymmetric information and its effects on the management of commercial companies occurs when the management team has better information about the company than its shareholders, its creditors and other stakeholders. This unequal access to information makes agents' operations less efficient, increasing the so-called agency costs and reducing the profit generated by societies.

The greater the size of the company, the greater the complexity of the operation of the company, which makes the informational distance between the management team and other subjects tend to increase. In listed companies this problem manifests itself more clearly and generates greater consequences.

The problem of asymmetric information arises on two closely related fronts:

The management team, on the one hand, and the rest of the agents, on the other: mainly against minority shareholders and the company's creditors.

Between majority shareholders and minority shareholders. In this sense, the different access to information about each other's societies is a source of permanent conflict.