Asked by Drayven Fenton on Jun 15, 2024
Verified
Product reviews help to alleviate problems associated with:
A) asymmetric information.
B) moral hazard.
C) positive externalities.
D) negative externalities.
Asymmetric Information
A situation where one party in a transaction has more or superior information compared to another, often leading to an imbalance in the transaction.
Product Reviews
Evaluations or assessments of a product's performance, quality, and usefulness, typically written by consumers or experts.
- Understand the impact of unequal information distribution on market results and the idea of resource allocation effectiveness.
Verified Answer
JZ
Jasmin ZhengJun 16, 2024
Final Answer :
A
Explanation :
Product reviews help to provide information to potential buyers, which helps to reduce the asymmetry of information between buyers and sellers. Asymmetric information can lead to market inefficiencies and unfair pricing, but product reviews can help to alleviate these issues.
Learning Objectives
- Understand the impact of unequal information distribution on market results and the idea of resource allocation effectiveness.
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