Info gaps

Question 1

Asymmetric info

Answer 1

B&S have diff amounts of info w/ one group having more info than the other

Question 2

Imperfect info

Answer 2

B&S lack info to make informed decisions

Question 3

info gap

Answer 3

B&S dont have info available to make decisions

Question 4

Moral hazard

Answer 4

Econ agents makes decision in their own bestinterest knowing that there’re potential risks & if probs result the cost will be on the other econ agent

Question 5

Perfect market

Answer 5

B& S have Potential access to same info = symmetric info

Question 6

imperfect market info

Answer 6

•Reality
- decisions based on imperfect info so don’t have necessary info to max welfare =info gap
- Also happens when B&S have more info than other = asymmetric info SO B&S can exploit gap for own benefit

Question 7

Graph analysis

Answer 7

• w/ imperfect info D shifts RIGHT
- B overestimates ben so Ray higher price for output .. . Misallocation bc overconsumptionn
- S underestimate ben to selling product so sold at too low price