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Information failure

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Question 5

An individual purchases a used electric vehicle for £14,000£14,000£14,000, believing the battery health is near perfect. However, the seller has intentionally cleared the onboard diagnostic error codes to hide a severely degraded battery pack. Consequently, the buyer experiences frequent breakdowns and derives only £5,000 £5,000\,£5,000 of utility from the vehicle. This mismatch between the price paid and the utility received is a direct result of which market phenomenon?

A

Moral hazard

B

Negative externality of consumption

C

Information failure

D

Principal-agent problem

Markscheme

Information failure Questions

  1. A Level
  2. /Economics
  3. /Information failure

11 exam-style questions on OCR A Level Economics Information failure. Each one has a worked solution and a mark scheme showing where the marks go.

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