If a Senior Manager Can Consistently Earn Excess Profits by Trading

question 71

Multiple Choice

If a senior manager can consistently earn excess profits by trading her company's stock,which form of efficiency is contradicted?

• A)Weak form.
• B)Semi-strong form.
• C)Strong form.
• D)No form of efficiency is contradicted.

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Definitions:

Normal Good

A good for which an increase in income raises the quantity demanded.

Inferior Good

A type of good for which demand decreases as the income of consumers increase, unlike normal goods for which demand increases with an increase in income.

Income Decrease

Income decrease refers to a reduction in the amount of money earned by an individual or received by a household, affecting their ability to spend and save.

Giffen Goods

A type of product that paradoxically experiences increased demand as its price rises, seemingly contrary to the basic law of demand due to the effect on consumption of essential goods.