1.3.4 Information Gaps Flashcards
1
Q
Information gaps
A
When some, or all, participants in an economic exchange do not have perfect knowledge.
2
Q
Symmetric information
A
When consumers and producers have the same level of knowledge and have perfect market information. So they know everything there is to know about the product and the effects of consuming it.
This leads to efficient allocation of resources.
3
Q
Asymmetric information
A
When there is unequal knowledge between consumer and producers. This leads to a misallocation of resources.
