Information Economics MCQs
Information Economics MCQs
Try to answer these Information Economics MCQs and check your understanding of the Information Economics subject. Scroll down and let's begin!
1: ________ occurs when one agent in a transaction knows about a hidden characteristic of a good.
A. The free-rider problem
B. The tragedy of the commons
C. Adverse selection
D. Moral hazard
2: Increases in productivity are difficult to achieve if __________.
A. The lack of precise units of measurement
B. Easy to store
C. The task is more personal
D. Preparing employee schedules
3: Service ________ means that a firm cannot store its services.
A. Intangibility
B. Perishability
C. Inseparability
D. Variability
E. Personalization
4: What is information economics?
A. The study of how information is produced and disseminated in society
B. The study of how individuals and firms make decisions in the presence of imperfect information
C. The study of how technology affects the production and distribution of goods and services
D. The study of the relationship between supply and demand in the market
5: In information economics, what is asymmetric information?
A. When buyers and sellers have access to the same information
B. When both parties have perfect information about the product
C. When one party has more information than the other, leading to a potential imbalance in decision-making
D. When all relevant information is publicly available
6: How does adverse selection occur in the context of information economics?
A. When sellers offer lower quality products to buyers
B. When buyers are more informed than sellers about the product
C. When buyers are unable to assess the quality of a product due to asymmetric information
D. When sellers face high production costs
7: What is moral hazard in information economics?
A. When buyers deliberately provide false information to sellers
B. When sellers act dishonestly in their interactions with buyers
C. When one party takes more risks because the other party bears the consequences
D. When sellers refuse to disclose important information to buyers
8: What is the principal-agent problem in information economics?
A. The conflict of interest between buyers and sellers
B. The issue of asymmetric information between two parties
C. The challenge of aligning the interests of the owner (principal) with those of the agent (employee) when there is information asymmetry
D. The negotiation process in economic transactions
9: What role does signaling play in overcoming information asymmetry?
A. Signaling helps in hiding important information from others
B. Signaling is a form of non-verbal communication that replaces information exchange
C. Signaling provides credible information to the other party and reduces uncertainty
D. Signaling creates confusion and mistrust between buyers and sellers
10: How does screening help in information economics?
A. Screening helps buyers identify low-quality products
B. Screening helps sellers identify high-quality buyers
C. Screening involves obtaining additional information from the other party to make better decisions in the presence of asymmetric information
D. Screening involves manipulating information to gain a competitive advantage
11: What is the role of reputation in information economics?
A. Reputation has no impact on economic decision-making
B. Reputation helps buyers and sellers build trust and reduce uncertainty in transactions
C. Reputation only matters in online marketplaces
D. Reputation is a concept unrelated to information economics
12: Which market structure is more susceptible to information asymmetry?
A. Perfect competition, where there are many buyers and sellers
B. Monopoly, where there is only one seller
C. Oligopoly, where there are a few dominant sellers
D. Monopsony, where there is only one buyer
13: How does information economics impact the pricing of goods and services?
A. Information economics has no influence on pricing decisions
B. In the presence of asymmetric information, sellers may adjust prices to account for uncertainty and quality differences
C. Pricing decisions are solely determined by supply and demand
D. Information economics only affects non-profit organizations
List of Information Economics ...
Available in:
Information Economics MCQs
