information gaps

Question 1

Symmetric information

Answer 1

consumers and producers have perfect
market information to make their decision. This leads to an efficient allocation of resources

Question 2

Asymmetric information

Answer 2

leads to market failure. This is when there is
unequal knowledge between consumers and producers leading to the misallocation of recources.

Question 3

imperfect information

Answer 3

where information is missing, so
an informed decision cannot be made.