Imperfect Information (AQA A-Level Economics): Flashcards
📚Flashcards
Practise the cards
10 cards from this deck
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Practise the cards
10 cards from this deck
Perfect information definition
Perfect information definition
Knowing everything relevant to economic decisions
Imperfect information definition
Imperfect information definition
Lacking complete knowledge about available choices
Merit goods (imperfect info context)
Merit goods (imperfect info context)
Beneficial goods that are under-consumed
Demerit goods (imperfect info context)
Demerit goods (imperfect info context)
Harmful goods that are over-consumed
Asymmetric information definition
Asymmetric information definition
One party has more relevant transaction info than the other
Adverse selection definition
Adverse selection definition
More-informed party uses knowledge against less-informed party
George Akerlof's contribution
George Akerlof's contribution
Analysed asymmetric info in 'lemons'; won 2001 Nobel Prize
What is a 'lemon' in economics?
What is a 'lemon' in economics?
Poor-quality second-hand car
Used car market pricing effect (asymmetric info)
Used car market pricing effect (asymmetric info)
Good and bad cars sell at roughly the same price
Result of lemons problem
Result of lemons problem
Bad cars tend to drive out the good