Question 1
Imperfect information on the part of buyers and sellers
◦ will not stop the economy from achieving market efficiency, assuming the other conditions for market efficiency hold.
◦ is no longer a problem because the "truth-in-advertising" regulations have been instituted.
◦ remains a barrier to achieving market efficiency, at least in some industries.
◦ cannot persist in a market economy.
Question 2
Bill sells Mary a worthless coin that Bill deviously told Mary "belonged to an ancient Persian king and is of enormous value to coin collectors." Economists would call this an
◦ efficient exchange, as any type of voluntary exchange promotes efficiency.
◦ inefficient exchange, as at least one party used false market information.
◦ efficient exchange, assuming Bill was not intentionally trying to trick Mary.
◦ inefficient exchange because there were externalities involved.
Dirham coin of Kaykhusraw II, Sivas, AH 638/AD 1240-1.
Mary Cassatt, The Coiffure.
Mary Cassatt, Study for In the Loge.
Bill Viola, Sketch for the set of The Greeting.
Ancient Climate Change: Following the Cretaceous
Ancient Bristlecone Pine