An Informed Party Can Use ________ to Give Information to an Uninformed

question 52

Multiple Choice

An informed party can use ________ to give information to an uninformed or lesser-informed party.

• A)signaling
• B)screening
• C)an individual mandate
• D)market noise

---

Definitions:

Income Elasticities

Income elasticities measure how the quantity demanded of a good changes in response to a change in consumers' income.

Normal Goods

Goods for which demand increases as consumer income rises, and decreases as consumer income falls.

Inferior Goods

Goods for which demand decreases as consumer income rises, in contrast to normal goods, where demand increases with higher incomes.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, reflecting the sensitivity of consumers to price changes.