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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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