| What does Perfect Information mean in Economics?
-What is Symmetrical Information? | -All Economic Agents have Full Knowledge on Prices, Costs, Benefits & Availability of Products
-Perfect Information that is Equally Accessible by all Parties in the Market is Symmetrical Information |
| What will Symmetrical Information Encourage?
-Why does this usually not happen [Obtaining Symmetrical Information in a Market] | -This allows the Efficient Allocation of Resources between Markets
-This is very Rare as it takes Time, Money and Resources to provide such Equal and Detailed Information |
| What is Asymmetrical Information?
-Why may this Happen? | -This is when Buyers, or Sellers, know more information, and that information itself is imperfect -this may be because the service they provide is unpredictable - health services will not know when someone will be ill, and with what -or moral hazard. this is when people take risks because they will not suffer the consequences if it goes all Wrong, but rather someone else will. banks know the government will prop them up if they get in trouble, so therefore, they do riskier behaviour. the government lacks information about how banks therefore will act. |
| What are the Reasons why Imperfect Information affect the Consumption of Merit and Demerit Goods? | -Consumers may not know the Full Benefit of a Merit Good - like a Good Education leads to a Better Salary
-Consumers may just not Have the Information to decide which Good is Right
-Consumers may also not know how Harmful a Demerit Good is
-Advertising for Demerit Goods, like Tobacco, can just 'Skip' over the Health Dangers |
| What are the Reasons why Information Failure can Influence the Provision of Merit and Demerit Goods | -Pension Providers will have a more Extensive Knowledge of Pension Schemes Available than Clients, leading to the Sale of an Unnecessary Scheme, or more Expensive Scheme
-Doctors will know More about Medicine, so can Persuade Clients to get the more Expensive one.
-Goods may just have Complex Information - like Computers can Fizzle old People |
