Question

Explain why businesses and consumers cannot get or choose not to get full information, and instead operate in a condition of imperfect information.

Answer 1

With perfect information in a market, all businesses and consumers have perfect and instantaneous knowledge of all prices in the market, their own utility, and own cost functions. However is an imaginary market structure which cannot be found in real practice. Although it shows an ideal picture of market conditions however in real life such information is absence. People lacks knowledge and are also lazy and careless that they do not bother about the minor difference in the product's price. Moreover there are numerous industries where the consumer still remains aware of all available products and prices. Thus as a result the businesses and consumers decides to operate in a condition of imperfect information