Question

The presence of _____________________ in transactions involving goods can easily cause a ______________________ if the result is only a relatively small number of buyer and sellers communicating enough information so that they can agree on a price.

A. imperfect information; thin market
B. adverse information; decline in prices or quantities of products sold
C. adverse selection; decline in prices or quality of purchased goods
D. imperfect selection; thick market

Answer 1

The correct answer is letter "A": imperfect information; thin market.

Step-by-step explanation:

Liquid markets are those with enough buyers and sellers that keep the balance of supply and demand. The opposite of that scenario is represented by thin markets because they have whether a few buyers or a few sellers.

Thin markets are mostly caused by imperfect information allowing only a reduced number of buyers or sellers having enough resources to correctly make transactions. Price spreads are usually larger in thin markets.