Question

Asymmetric information: Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices causes common property resources to be overused. prevents markets from reaching a socially desirable outcome. allows markets to reach a socially desirable outcome. causes markets to collapse.

Answer 1

Answer:

prevents markets from reaching a socially desirable outcome

Explanation:

Asymmetric information is when one of the parties in a transaction has more information than the other party.

For example, a seller might purposely sell a faulty product to a buyer. The seller knows the product is faulty but the buyer doesn't. This prevents markets from reaching socially desirable outcome.

Asymmetric information can lead to adverse selection which can prevent markets from reaching socially desirable outcome.

I hope my answer helps you

Answer 2

Answer:

The correct answer is letter "B": prevents markets from reaching a socially desirable outcome.

Explanation:

Asymmetric Information defines a condition in which one party knows more than the other in a transaction. Additionally, if that party knew the information withheld, the information deficient person could have made a different decision. Purchase negotiations are the most common type of transactions where asymmetric information affects the outcome.

Therefore, asymmetric information prevents from reaching socially desirable results.