a) Information gaps
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Last updated 8:33 PM on 2/12/26
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4 Terms
1
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define perfect information/symmetric information
when producers and consumers have equal information about a good or service
2
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define information gap/asymmetric information
when producers and consumers have unequal information about a good or service
3
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state what an information gap/asymmetric information causes
irrational decision making
→ externalities
→ market failure
4
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describe how an information gap/asymmetric information produces externalities
goods and services that produce negative externalities → over-consumed + over-produced
goods and services that produce positive externalities → under-consumed + under produced
market failure
