With imperfect information, the price the good is sold for is either higher or lower than the equilibrium price, depending on which party has the imperfect information, leading to inefficiencies in buying and selling. This situation can result in market failures, as buyers may either overpay or underpay for goods, leading to misallocation of resources and potentially causing one party to exit the market. Additionally, when parties do not have access to complete information, they may not be able to make optimal decisions, which can hurt overall economic efficiency and trust in the marketplace.
Explain why imperfect information in the economy is detrimental.(1 point)
Responses
With imperfect information, the price the good is sold for is the equilibrium price since both parties have the same information, leading to inefficiencies in buying and selling.
With imperfect information, the price the good is sold for is the equilibrium price since both parties have the same information, leading to inefficiencies in buying and selling.
With imperfect information, the price the good is sold for is higher than the equilibrium price since the buyer has more knowledge than the seller, leading to inefficiencies in buying and selling.
With imperfect information, the price the good is sold for is higher than the equilibrium price since the buyer has more knowledge than the seller, leading to inefficiencies in buying and selling.
With imperfect information, the price the good is sold for is lower than the equilibrium price since the seller has more knowledge than the buyer, leading to inefficiencies in buying and selling.
With imperfect information, the price the good is sold for is lower than the equilibrium price since the seller has more knowledge than the buyer, leading to inefficiencies in buying and selling.
With imperfect information, the price the good is sold for is either higher or lower than the equilibrium price, depending on which party has the imperfect information, leading to inefficiencies in buying and selling.
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