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EFFICIENT: The state of resource allocation the exists when the highest level of consumer satisfaction is achieved from the available resources. Competitive markets, absent of any market failure and especially market control by either side, is efficient. In particular, this feat is accomplished when the price buyers are willing and able to pay for a good--based on the satisfaction obtained--is equal to the price sellers need to charge for a good--based on the opportunity cost of production. In other words, the value (satisfaction) of stuff given up to get a good is the same as the value (satisfaction) of the good produced. Satisfaction won't increase by producing more of either.
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ASYMMETRIC INFORMATION Information is not equally available to everyone. Asymmetric information results because efficient information search inevitably stops short of compete information. Some people obtain more benefits from information than others, are willing to incur higher search costs, and thus end up knowing more. Or they incur lower information search costs and have easier access to the information. In a market, sellers tend to have more information about the good than buyers. Asymmetric information gives rise to adverse selection, moral hazard, and the principal-agent problem. These problems can be lessened through signalling and screening.
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WHITE GULLIBON
[What's This?]
Today, you are likely to spend a great deal of time looking for a downtown retail store seeking to buy either a replacement remote control for your stereo system or a computer that can play video games and burn DVDs. Be on the lookout for door-to-door salesmen.
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This isn't me! What am I?
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There were no banks in colonial America before the U.S. Revolutionary War. Anyone seeking a loan did so from another individual.
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"I shall do less whenever I shall believe what I am doing hurts the cause and I shall do more whenever I shall believe doing more will help the cause. I shall try to correct errors when shown to be errors and I shall adopt new views so fast as they shall appear to be true views. " -- Abraham Lincoln, 16th US president
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ABA
American Bankers Association, Associate in Business Administration
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