June 2020 LSAT
Section 4
Question 14
The relation between the conception in passage A and the conception in passage B, respectively, of how markets handle...
Replies
Brittany on July 19, 2022
Agreed, I am completely lost on this one.amajerus on September 27, 2022
I am also confused but my best guess is this:In passage A, the market actually can predict the future of the population like in elections and is always correct. This is like a thermostat because if the thermostat is set to 70, you reliably know that the room is or will be 70 degrees
In passage B, the market is just a reflection of how the population is, like a thermometer testing the temperature of the room and reporting it, but having no impact on the future temperature
Not sure if that is the actual justification but its the best I could come up with
Margarita on July 12, 2023
can someone explain this?Emil-Kunkin on July 19, 2023
Passage A holds that markets adjust to the knowledge held by its participants. That is, the market responds to the knowledge of its participants, and the participants who do not yet have knowledge manage to glean knowledge from the markets.Passage B holds that markets merely reflect the general knowledge at any given time. They don't play a role in changing it, in reading the current consensus.
This is a solid match for B. A thermostat gathers information about the temperature but also sets the temperature. If you input data into a thermostat that will in turn alter the temperature of the room, much as if you feed info into a market you will alter the behavior of others in the market. Meanwhile, a thermometer only reads the room, exactly what B thinks markets do.
This is a notoriously annoying question, mainly because who remembers the difference between a thermometer and a thermostat?