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From course:

Economics A Level (DONEEEEEEE)

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Question:

How can Asymmetric Information/ Imperfect Information challenge Traditional Economics?

Author: eric_galvao



Answer:

-Traditional Assumes that Economic Agents have all the Information needed to make the Right Choice, therefore, leading to the Perfect Choice. -However, in real life, Economic Agents will most likely not have All Information needed, therefore, leading to Market Failure -They may also be in a Situation where 1 Party knows more than the Other - which can be Abused. -Therefore it is Wrong to Assume Rationality predicts how Consumers Consume.


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