Imperfect Information Flashcards
1
Q
Define Information gaps
A
When someone doesnt have full information about the benefits or costs of their decisions
2
Q
What do information gaps lead to
A
Under-consumption of merit goods, or Over-consumption of demerit goods, leads to market failure
3
Q
How does the government prevent information gaps for merit goods
A
Regulation
Provision of Information
Subsidies
4
Q
How does the governmnet prevent information gaps for demerit goods
A
Regulation
Provision of Information
Indirect Taxes
5
Q
What is Asymmetric Information
A
Where a party has more information than the other in a transaction
6
Q
Cons of Government Provision of Information
A
Costly
No effectiveness guarantee
Not effective in the SR
