Inefficiency Due to Information Asymmetry Figure 5.12 illustrates the potential social surplus loss associated with infor mation asymmetry.32 Du represents the quantities of some a consumer would purchase at various prices in the absence of perfect information about its It can, therefore, be thought of as the consumer's uninformed demand schedule. Di the consumer's informed demand schedule amounts of the good that would be purchased at various prices consumer were perfectly informed about its quality. The quantity actually purchased by the uninformed consumer is determined by the intersection of Du with the supply schedule, S. This amount, Qu, is greater than Qu, the amount that the consumer would have purchased if fully informed about the quality of the good. The darkly shaded area abc equals the deadweight loss in consumer surplus resulting from the overconsumption. (For each unit purchased beyond Qi, the consumer pays more than its marginal value as measured by the height of the informed demand schedule.) This excess consump- tion also results in a higher equilibrium price (Pu), which transfers surplus equal to the area RubaP from the consumer to the producer of the good. Figure 5.12 signals the presence of information asymmetry if the producer could have informed the con- sumer about the true quality of the good at a cost less than the deadweight loss in consumer surplus resulting when the consumer remains uninformed More gen- erally, we have market failure due to information asymmetry when the producer does not the amount of information maximizes the between the reduction in deadweight loss and the cost of providing the information.