In the context of market failure, 'Asymmetric Information' leads to: MCQ with Answer and Explanation

In the context of market failure, 'Asymmetric Information' leads to:
A. Efficient market outcomes
B. Zero transaction costs
C. Perfect competition
D. Adverse selection and moral hazard
Answer: Option D
Solution (By JKSSB Mock Tests)
Asymmetric information, where one party has more information than the other, can lead to adverse selection (before the contract) and moral hazard (after the contract).

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Practice More Economy Set 1 Questions

Question #1
A 'merit good' is a good that:
A. the government encourages or provides because it has positive externalities and is under-consumed
B. is only for the rich
C. has negative externalities
D. is consumed voluntarily

Correct Answer: Option A


Explanation:
Merit goods are under-consumed if left to the market, so government encourages their provision.

This question belongs to: Economy GK Economy Set 1
Question #2
The 'Eighth Five Year Plan' period was:
A. 1992-1997
B. 1997-2002
C. 1987-1992
D. 1990-1995

Correct Answer: Option A


Explanation:
The Eighth Five Year Plan covered 1992-1997.

This question belongs to: Economy GK Economy Set 1
Question #3
The 'Pradhan Mantri Ujjwala Yojana' was launched in:
A. 2016
B. 2014
C. 2018
D. 2017

Correct Answer: Option A


Explanation:
PMUY was launched in 2016.

This question belongs to: Economy GK Economy Set 1