Lesson Plan

• Describe what imperfect information is and differentiate it from perfect information.
• Explain adverse selection and moral hazard and how each leads to market failure.
• Analyse the impact of imperfect information on economic efficiency using dead‑weight loss.
• Evaluate government interventions that aim to reduce information asymmetry.
• Apply the concepts to real‑world examples such as used‑car markets and health insurance.

• Projector and screen for slides/diagrams
• Whiteboard and markers
• Handout summarising types of imperfect information and the intervention table
• Printed case‑study worksheets (used‑car, health insurance)
• Calculators (optional for DWL calculations)

Begin with the question, “What could go wrong if you buy a used car without knowing its condition?” Connect this to students’ prior knowledge of supply‑demand equilibrium. Explain that today’s success criteria are to identify types of imperfect information, illustrate the resulting efficiency loss, and propose appropriate policy responses.

1. Do‑now (5’) – Quick written response to the opening question; share a few answers.
2. Mini‑lecture (15’) – Define imperfect information, contrast with perfect information, introduce adverse selection and moral hazard with real‑world examples.
3. Diagram activity (10’) – Project the demand‑shift diagram; students draw the shift caused by imperfect information and shade the dead‑weight loss.
4. Case‑study analysis (15’) – In pairs, work through a worksheet on the used‑car “lemons” problem; identify the type of information problem and discuss the efficiency loss.
5. Government intervention discussion (10’) – Review the comparative table of policy tools; students match each tool to the type of information problem it addresses.
6. Check for understanding (5’) – Exit‑ticket quiz with three short questions on definitions, DWL, and one suitable intervention.

We recap that imperfect information distorts market outcomes, creates dead‑weight loss, and can be mitigated through disclosure, certification, subsidies or public provision. For the exit ticket, each student writes one real‑world example of an information problem and a suitable policy response. Homework: write a short essay evaluating whether a mandatory nutritional‑information disclosure rule is welfare‑enhancing.