2.9 information failure Flashcards
1
Q
what is asymmetric information?
A
when there is unequal knowledge between consumers and producers, leading to a misallocation of resources.
2
Q
what is moral hazard?
A
when an individual takes on more risk than usual as they do not bear the full cost of the risk.
3
Q
what does information failure lead to?
A
demerit goods being over consumed
merit goods being under consumed
underproduction
overproduction
