Term
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Definition
| Buyers know quality of what they're buying. Competition unblocked ,transactions voluntary |
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Term
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Definition
| Buyers don't have all the information about what they're buying, run risk of getting played |
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Term
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Definition
| Highest quality product isnt for sale because of unverifiable information in the market place. Buyers cant be sure of quality so they settle for lower priced version. Can be so severe markets break down entirely. |
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Term
| Markets with Adverse selection |
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Definition
| Used cars, college admissions, real estate, health care and health insurance |
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Term
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Definition
| Example; All car owners say their car is in good shape, possibly isnt. Doctors may suggest care that may not be necessary. |
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Term
| Signals and screening behavior |
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Definition
| Ways to provide information for buyers to see if information they were supplied is somewhat verifiable |
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Term
| Examples of signals and screening behavior |
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Definition
| taking car to mechanic, health exams before providing insurance, credit checks before loans |
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Term
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Definition
| The ability to set prices well above cost of production. "Monopolies". Key is to limit competition. |
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Term
| 1st Degree Price Discrimination |
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Definition
| Charge each person a different price, specifically the highest someone is willing to pay |
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Term
| 2nd degree price discrimination |
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Definition
| Charge a different price for different quantities sold |
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