Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Information asymmetry reduces consumer demand.
B
Information asymmetry has no effect on consumer demand.
C
Information asymmetry can lead to increased consumer demand for certain products.
D
Information asymmetry only affects the supply side of the market.
Understanding the Answer
Let's break down why this is correct
Answer
Consumer demand refers to how much of a product or service people want to buy at a given price. Information asymmetry occurs when one party in a transaction has more or better information than the other. In a market, if consumers lack information about a product's quality or price, they may not demand it as much, leading to lower sales. For example, if a buyer does not know that a car has been in an accident, they might be willing to pay more than it's worth, affecting their demand. Therefore, when consumers have better information, they can make smarter choices, which can increase demand for products that are genuinely valuable.
Detailed Explanation
When some buyers have more information than others, they might want certain products more. Other options are incorrect because Some might think that not having all the information makes people want to buy less; It's a common belief that information doesn't change how much people want to buy.
Key Concepts
consumer demand
Topic
Consumer Demand and Information Asymmetry
Difficulty
easy level question
Cognitive Level
understand
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