Which of the following statements is correct? a) Acquiring more information can never be inefficient.

Which of the following statements is correct?

a) Acquiring more information can never be inefficient.

b) Because information is different from typical goods and services, it cannot be provided in a market.

c) Too little information is provided if the market for information is a monopoly.

d) The marginal benefit from more information does not decrease.

Answer: c) Too little information is provided if the market for information is a monopoly.

Information has properties characteristic of a public good; it is jointly non-rival and non-excludable, in the case of information goods, no one can be excluded from using the information once it has been produced and its use by one user does not affect the ability of others to use it. In an analytically analogous way of thinking, a monopolistic information supplier, acting rationally within the framework of a monopoly, always has an incentive to supply the public with less information so that they can gain higher profits within their particular domain, thus making the provided amount of information socially suboptimal. Competition in the market for information results in better consequences in that the firms strive to ensure that they pass as much information as possible to the consumers. As a result, options a, b, and d are also wrong for the following reasons: gathering more information may be unprofitable, information may be introduced into a market, and the extent of extra benefit from more information usually declines.