Market failure - Public Goods + Asymmetric Information

Question 1

Public Goods

Answer 1

Goods for consumption that are non-excludable and non-rivalrous.

Question 2

Free-Rider Problem

Answer 2

The issue that arises when people that do not pay for a good or service have access to it.

Question 3

Asymmetric Information

Answer 3

The issue that arises when the seller has more information about the good or service than the buyer, or vice versa.

Question 4

Adverse Selection

Answer 4

A market situation where buyers and sellers have more information than the other, leading to the party with the most information making optimal decisions for themselves, at the cost of the other party.

Question 5

Moral Hazard

Answer 5

A market situation where a buyer or seller protected from risk makes optimal decisions for themselves, at the cost of the other party.