A pharmaceutical company advertises to consumers that their drug HeartONE helps lower the chance of heart attacks, but does not advertise that the drug also helps to lower the chance of kidney disease. Under this asymmetric information, it is clear that relative to the efficient equilibrium, the market is supplying too many HeartONE drugs, because some units of the drug are sold that are valued less than costs. supplying too few HeartONE drugs, because some units of the drug are not sold that are valued more than costs O demanding too many HeartONE drugs. because some units of the drug are sold that are valued less than costs demanding too few HeartONE drugs, because some units of the drug are not sold that are valued more than costs

A pharmaceutical company advertises to consumers that their drug HeartONE helps lower the chance of heart attacks, but does not advertise that the drug also helps to lower the chance of kidney disease. Under this asymmetric information, it is clear that relative to the efficient equilibrium, the market is supplying too many HeartONE drugs, because some units of the drug are sold that are valued less than costs. supplying too few HeartONE drugs, because some units of the drug are not sold that are valued more than costs O demanding too many HeartONE drugs. because some units of the drug are sold that are valued less than costs demanding too few HeartONE drugs, because some units of the drug are not sold that are valued more than costs

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 10E

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