#14 - Concept Reference, Parallel

[Adam Tyson]

A thermostat does not control the temperature on its own. Rather, it is the device that people manipulate in order to raise and lower the temperature. In that sense, it reacts to the inputs that it receives. Dial it up, and it gets warmer; dial it down, and it gets cooler. People are making the changes, but they use the thermostat to implement the changes. That's similar to how the market behaves in passage A: people control it through their inputs. As buyers and sellers do their thing, the market adjusts to reflect those inputs by raising and lowering prices.

A thermometer is not reactive in the same way. It simply tells you what is the case at any given moment. If it's hot outside, it says so; if it's cold, it says so. It doesn't adjust to anyone's behavior. You can't raise the reading on the thermometer by putting on a bathing suit and saying you want to hit the beach. That's what passage B thinks the markets are like: they just tell you what's true at any given moment, rather than changing based on human inputs.

As I said earlier in this thread, I don't love this analogy. It has some problems, and you're alluding to some of them. But the question isn't asking for a perfect analogy; it's asking for the answer that is most analogous to the relationship between those conceptions, and answer B is far better than any of the others, despite its minor imperfections.

Answer D, btw, is just two different methods for doing the exact same thing: spreading information. There is no active/passive relationship, no difference in how either responds to inputs.

[uncleschaeflit]

Yea, but D is about speed. News broadcast is quick and magazine is slow. Which, to me, seems to nicely reflect the respective passages and more directly answer "how markets handle the knowledge of their participants."