Information Gaps Flashcards

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Make sure you understand the information on each card. If something's unclear, click the link to the revision notes at the bottom of the page for more details.

2️⃣ Test yourself:

Look at the question or prompt on each card and try to remember the answer before flipping it over.
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Note: We may include questions that have multiple correct answers. It's useful to remember specific examples to understand these concepts better.

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What is an information gap in economics?

It is when people do not have enough or correct information to make the best choice.

It is when one side of a deal knows more than the other side.

All buyers and sellers know all the needed facts about price, quality and risks.

Choices are based on poor facts, so too much or too little is bought or sold, and resources are not used in the best way.

Buying a used car without knowing its true history or faults.

Healthcare, because treatments are complex and hard for patients to judge.

If people think a product is better than it is, demand is too high; if they think it is worse, demand is too low.

Often the seller knows more about the product than the buyer.

High-quality sellers may leave the market if they cannot get a fair price.

It is time or money spent to find facts; if it is high, people stop searching and decide with poor information.