Question 1

When a transaction takes place repeatedly, one way to avoid information asymmetry is:

Accepted Answer

A)  building a reputation.
B)  screening.
C)  statistical discrimination.
D)  All of these are ways to avoid information asymmetry in repeated transactions.E) A) and D)
F) B) and C)

Question 2

Taking action to reveal private information about someone else is called:

Accepted Answer

A)  screening.
B)  signaling.
C)  discriminating.
D)  illegal.E) A) and D)
F) None of the above

Question 3

All food sold in the United States must have an ingredient list on its packaging. This is an example of:

Accepted Answer

A)  screening.
B)  signaling.
C)  regulation and education.
D)  building a reputation.E) B) and C)
F) C) and D)

Question 4

Which of the following is an example of statistical discrimination?

Accepted Answer

A)  Auto insurance providers charge higher premiums to drivers of cars that are more likely to be stolen.
B)  The government mandates that all drivers must have auto insurance.
C)  Auto insurance providers offer perks to customers who have been with the provider for a longer period of time.
D)  All of these are examples of statistical discrimination.E) A) and B)
F) A) and C)

Question 5

An important type of information asymmetry is:

Accepted Answer

A)  information withholding.
B)  advantage imbalance.
C)  moral hazard.
D)  ethical constraint.E) C) and D)
F) B) and C)

Question 6

Which of the following is a case of asymmetric information?

Accepted Answer

A)  The buyer and seller of a used car don't know how long the car will operate.
B)  A provider of health insurance does not know whether a specific client is a smoker or not.
C)  Neither you nor your home insurance company has perfect information about whether a flood will occur.
D)  None of these are examples of asymmetric information.E) C) and D)
F) All of the above

Question 7

Generalizing using statistical discrimination is:

Accepted Answer

A)  an irrational response and always leads to loss of surplus.
B)  a rational response to being on the wrong end of an information asymmetry.
C)  a rational response, although government always steps in to prevent it.
D)  All of these are true.E) A) and B)
F) None of the above

Question 8

Information asymmetry is present when:

Accepted Answer

A)  one person knows more than another.
B)  there is risk in an exchange.
C)  both parties are lacking the same information.
D)  All of these statements are true.E) A) and C)
F) All of the above

Question 9

When parties attempting to enter into an agreement lack information:

Accepted Answer

A)  they should always gain more information before making a decision.
B)  the cost of acquiring information is sometimes prohibitive.
C)  an exchange will never happen.
D)  the exchange will happen, but surplus is unlikely to be maximized.E) C) and D)
F) A) and C)

Exam 10: Information

When a transaction takes place repeatedly, one way to avoid information asymmetry is:

Correct Answer
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Generalizing using statistical discrimination is:

Correct Answer
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All food sold in the United States must have an ingredient list on its packaging. This is an example of:

Correct Answer
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An important type of information asymmetry is:

Correct Answer
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Taking action to reveal private information about someone else is called:

Correct Answer
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Which of the following is an example of statistical discrimination?

Correct Answer
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Which of the following is a case of asymmetric information?

Correct Answer
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Information asymmetry is present when:

Correct Answer
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When parties attempting to enter into an agreement lack information:

Correct Answer
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Exam 10: Information

When a transaction takes place repeatedly, one way to avoid information asymmetry is:

Correct AnswerverifiedShow Answer

Generalizing using statistical discrimination is:

Correct AnswerverifiedShow Answer

All food sold in the United States must have an ingredient list on its packaging. This is an example of:

Correct AnswerverifiedShow Answer

An important type of information asymmetry is:

Correct AnswerverifiedShow Answer

Taking action to reveal private information about someone else is called:

Correct AnswerverifiedShow Answer

Which of the following is an example of statistical discrimination?

Correct AnswerverifiedShow Answer

Which of the following is a case of asymmetric information?

Correct AnswerverifiedShow Answer

Information asymmetry is present when:

Correct AnswerverifiedShow Answer

When parties attempting to enter into an agreement lack information:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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