Question

A consequence of adverse selection is:

Question 27 options:

	A) buyers gain surplus they would have lost with complete information.
	B) transactions do not take place that would have been possible if the parties had the same information.
	C) sellers gain surplus they would have lost with complete information.
	D) All of these statements are true.

When one person knows more than another, it creates a situation:

Question 28 options:

	A) in which the transaction will not occur.
	B) called information asymmetry.
	C) called information dominance.
	D) in which the transaction is always regretted.

Answer 1

27)

Right Answer: ( B)

If complete information is made available to all parties, then transaction might not take place.

28)

Answer: (B)

When one person knows more than other, it is called information asymmetry. Here, one party is more informed than other.