information gaps

Question 1

types of info gaps

Answer 1

incomplete

asymmetric

Question 2

incomplete information

Answer 2

lack of info on benefits or costs of their decisions
=underconsumption
=market failure

Question 3

regulation

Answer 3

legal requirements, provides info to people

Question 4

providing information

Answer 4

provides insights

Question 5

subsidy

Answer 5

decreases price and increases quantity, more people consume as a result
allocates more resources towards consumption

Question 6

examples of overconsumption

Answer 6

smoking,
market failure from over consumption
gov intervenes with regulation
stick labels on packet saying smoking kills

adveritsing- disturbing images of what smoking does to your lungs

specific tax- increases price and reduces quantity

Question 7

asymmetric

Answer 7

when one party knows more than the other party in the transaction

leads to misallocation of resources

Question 8

gov on asymmetric info

Answer 8

e.g. if therres a fault in a car 6 months after buying, suppliers need to supply full refund, replacement or repair

or private healthcare, gov employs regulators for these people to stop exploitation

Question 9

Information gaps

Answer 9

When consumers or producers lack the information needed to make an informed decision.

Question 10

Incomplete information

Answer 10

When someone doesn’t have full information about the benefits or costs of their decisions

Question 11

Asymmetric information

Answer 11

Asymmetric information is when one party knows more than another party in a transaction.

E.g. a used car seller knowing more about the car they’re selling than the consumer; or an antique collector knowing more about the antique they’re buying than the seller.