Mini Game

Asymmetric information represents a market situation in which :

• All parties to a transaction possess less than full information.

• Some information possessed by the parties in a transaction may be false

• One party entering a market transaction has more complete information than the other about the characteristics of a product.

• A zero-sum game exists.

There are two consequences of asymmetric information. They are :

• Adverse selection, which arises before the transaction occurs, and moral hazard, which occurs after the transaction.

• Adverse selection and moral hazard, both of which occur before the transaction.

• Adverse selection and moral hazard, both of which occur after the transaction.

• Moral hazard, which arises before the transaction occurs, and adverse selection, which occurs after the transaction.

What is the impact of adverse selection on economic efficiency in a market ?

• Adverse selection will increase economic efficiency.

• Adverse selection will reduce economic efficiency.

• Adverse selection does not have any impact on economic efficiency in a market.

• Consumer wants will shift toward the goods left in the market.

The market for lemons :

• when buyers know products inside out before purchasing it, high quality products may drive out low quality products (lemons) of the market.

• when buyers know products inside out before purchasing it, low quality products (lemons) definitely can drive high quality products out of the market.

• when buyers cannot judge a products quality before purchasing it, high quality products may drive out low quality products (lemons) of the market.

• when buyers cannot judge a products quality before purchasing it, low quality products (lemons) may drive high quality products out of the market.

If potential buyers have difficulty separating lemons from good used cars, what will they do ?

• They will take this into account in the prices they are willing to pay.

• They will not take this into account in the prices they are willing to pay.

• They will be absolutely indifferent between cars, and will pay the same price for either type of car.

• They will pay a price for a car that is always too high.

Suppose that half of used cars offered for sale are reliable and half are unreliable. If potential buyers are willing to pay $5,000 for a reliable car, but only $2,500 for an unreliable one, how much will buyers offer for a car ?

• $4,999

• $5,000

• $3,750

• $2,500

What is the term given to the problem caused by an agent pursuing his own interests rather than the interests of the principal who hired him ?

• The principal–agent problem

• Adverse selection

• Moral hazard

• The capture theory of regulation

Market signaling :

• is a way of conveying information to other parties in a transaction where asymmetric information exists.

• results in an optimum solution to a beach kiosk scenario

• represents a dominant strategy in a multiplayer game.

• None of the above.

What do you think of the image below?

• Market failure

• Economic development

• Economic solutions for the market

• Market segment

“The Law on Consumer Protection of Vietnam recognizes and guarantees the right of consumers to be provided with accurate and complete information on important factors related to the object of the transaction such as origin and origin of goods. And other necessary information about the goods that consumers have bought and used” What solutions does the government have to deal with asymmetric information?

• food label regulations

• commodity price increase

• recommend buying

• Nothing