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Bus-G202 Topic 8
Exam 3
14
Business
Undergraduate 2
12/09/2011

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Cards

Term
Asymmetric Information (demand)
Definition
not equal information. used cars performance problems are not revealed to potential consumers
Term
With asymmetric info (demand) (2)
Definition
1 consumers pay too much for the products
2 from the view of the efficiency too much is consumed
Term
Asymmetric Information
Definition
not equal, one sided information, one party knows more
Term
Asymmetric information (supply)
Definition
worker safety: health risks from producing butter flavored micro wave popcorn
Term
With Asymmetric Info (supply)
Definition
- workers will be under compensated
- from the view of efficiency too much labor is supplied
Term
Government ensures consumer and worker safety through....
Definition
productive regulation. different agencies regulate different aspects of the marketplace
Term
Private regulation forms when...
Definition
customers perceive that government quality regulations are insufficient.
Term
Private regulation will be profitable for firms if..
Definition
.the market values the additional regulation over the cost of providing it
Term
Examples of private regulation
Definition
1 Best Western
2 Underwriters Laboratories
3 Carfax.com
Term
Public regulations
Definition
1 don't always consider the costs of regulation
2 Funded through taxes paid by all individuals
3 tend to respond to only media scares
Term
Private regulations
Definition
1 profitability depends on the efficiency of value of brand vs cost of implementation
2 People that benefit from regulation pay cost of implementation for it
3 Based on the need for regulation from within the industry
Term
How much regulation is efficient
Definition
1 individuals benefit from ensuring safety in consumer products and working conditions
2 however each level of safety is costly to obtain
Term
Is 100% safety efficient
Definition
No it is efficient to enact only the regulations that are more beneficial than costly. Regulate to the point where MC=MB
Term
Socially minded NGOs will take action whenever...
Definition
they believe public and private regulation are insufficient at ensuring quality
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