Market Signals Are

question 25

Multiple Choice

Market signals are

• A) actions taken by buyers and sellers to communicate quality in the presence of perfect information.
• B) only strong if obtaining the signal is more costly for individuals with valued traits than for those with non-valued traits.
• C) used to differentiate those who will drive equally carefully whether or not they have auto insurance from those who drive less carefully when they have insurance.
• D) used to distinguish between high and low quality and help correct the adverse selection problem.

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Definitions:

Denitrifying Bacteria

Bacteria involved in the nitrogen cycle, converting nitrates in soil into nitrogen gas, thereby reducing nitrogen availability to plants.

Nitrate

A polyatomic ion with the chemical formula NO3− or a compound containing this ion; important in the nitrogen cycle and used in fertilizers.

Nitrogen Gas

A diatomic, colorless, odorless, and tasteless gas that makes up about 78% of the Earth's atmosphere.

Food Chain

A linear sequence of organisms through which nutrients and energy pass as one organism eats another.