Suppose a Competitive Market with Adverse Selection Has Settled into a Pooling

question 23

True/False

Suppose a competitive market with adverse selection has settled into a pooling equilibrium where everyone is offered the same price.If full markets are re-established through signals, the new equilibrium will be more efficient than the original pooling equilibrium.

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Definitions:

Reliability

In psychological testing, the consistency or stability of test scores from one testing to another.

Validity

In psychological testing, the degree to which a test measures what it is supposed to measure.

Interest Inventory

A self-assessment tool that helps individuals identify their interests as part of career planning or personal development.

Forced-choice Format

A method of questioning that offers fixed choices between two or more alternatives.