Unit 2: Microeconomics
Topic 2.10: Market Failure — Asymmetric Information Questions
Practice 20 exam-style questions for IB Economics Topic 2.10. Review the question stems below, then unlock the full Question Bank to access markschemes, model answers, and AI grading.
34 marks
Using the example of health insurance, explain the problem of adverse selection.
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One way to reduce asymmetric information in markets is through:
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Warranties offered by sellers of used cars are an example of:
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Explain the concept of moral hazard using an example from everyday life.
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Insurance companies require medical examinations before issuing life insurance policies. This is an example of:
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Explain how reputation mechanisms and online reviews help reduce asymmetric information.
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Explain two ways in which government intervention can reduce asymmetric information.
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Explain two market-based solutions to the problem of asymmetric information.
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One way to reduce asymmetric information in markets is through:
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Warranties offered by sellers of used cars are an example of:
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Explain two market-based solutions to the problem of asymmetric information.
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Explain two ways in which government intervention can reduce asymmetric information.
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Explain how reputation mechanisms and online reviews help reduce asymmetric information.
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The market for second-hand cars is often cited as an example of asymmetric information because:
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Insurance companies require medical examinations before issuing life insurance policies. This is an example of:
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Moral hazard is a problem of asymmetric information that occurs when:
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