When the Price Is ________ the Equilibrium Price,we Would Expect

question 134

Multiple Choice

When the price is ________ the equilibrium price,we would expect there to be a ________,causing the market to put ________ pressure on the price until it went back to the equilibrium price.

• A) above; surplus; upward
• B) above; shortage; downward
• C) below; surplus; upward
• D) below; shortage; downward
• E) above; surplus; downward

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Definitions:

Arbitrage Opportunity

This refers to the chance to buy an asset at a low price in one market and simultaneously sell it at a higher price in another, realizing a profit without risk.

Expected Return

The weighted average of all possible returns from an investment, factoring in the probabilities of each outcome.

Firm-characteristic Variables

Factors specific to a company that can influence its stock price, such as size, earnings, and debt levels.

Risk Premiums

The additional return that an investor expects to receive for taking on additional risk.