Information Gaps

Question 1

Information gaps

Answer 1

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

Question 2

Incomplete information

Answer 2

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

Question 3

Asymmetric information

Answer 3

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 collecting knowing more about the antique they’re buying than the seller.

Question 4

We’ve seen how the market can fail in four different ways:

Answer 4

Negative externalities, positive externalities, public goods, information gaps