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Chapter22 - Chapter22 MULTIPLECHOICE 1 Ineconomics,(n a...

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Chapter 22 Frontiers of Microeconomics MULTIPLE CHOICE 1. In economics, a difference in access to relevant knowledge is called a(n) a. behavioral gap. b. frontier gap. c. information asymmetry. d. access imperfection. ANSWER: c. information asymmetry. TYPE: M DIFFICULTY: 1 SECTION: 22.1 2. When asymmetric information affects a relationship between two parties, it is always the case that 3. A worker knows more than his employer about how much effort he puts into his job. This is an example of 4. A seller of a used car knows more than the buyer about the car’s condition. This is an example of 5. Which of the following relationships involves asymmetric information? a. An employee knows more than his employer knows about his work effort. b. A borrower knows more than the lender about his ability to repay the loan. c. The seller of a 30-year-old house knows more than the buyer about the condition of the house. d. All of the above are correct. ANSWER: d. All of the above are correct. TYPE: M DIFFICULTY: 1 SECTION: 22.1 163
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164   Chapter 22/Frontiers of Microeconomics
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