Question

• Provide one example (not in the textbook) where there is inadequate buyer information about sellers.
• Provide one example (not in the textbook) where there is inadequate seller information about buyers.

Answer 1

Solution:

Inadequate buyer information about sellers: let us consider the example of insurance market, here the seller is insurance company and buyer is individual consumer, in this example insurance companies does not have adequate information about the smoking habits of the buyers.

Inadequate seller information about buyers: let us consider the example of car seller, here the seller is car owner and buyer is individual consumer, in this example the buyer does not know if there are any problems in the car.