Information Gaps Flashcards
1
Q
Incomplete information
A
Is a type of information failure and info gaps when someone doesn’t know or isn’t aware of the full benefits of a good
2
Q
What happens as a result of incomplete information
A
Market failure and the gov intervenes with regulations and subsidies
3
Q
Why does Overconsumption happen?
A
Consumers are not made aware of the consequences of their actions
4
Q
How does the government intervene with information gaps
A
Specific taxes
Advertising
Regulations eg: banning, restrictions
5
Q
Asymmetric information
A
When one party knows more than another party when completing a transaction.
6
Q
What does asymmetric information lead to
A
- Misallocation of resources
2.Market Failure
