If Markets Are in Equilibrium, Which of the Following Conditions

question 106

Multiple Choice

If markets are in equilibrium, which of the following conditions will exist?

• A) Each stock's expected return should equal its required return as seen by the marginal investor.
• B) All stocks should have the same expected return as seen by the marginal investor.
• C) The expected and required returns on stocks and bonds should be equal.
• D) All stocks should have the same realized return during the coming year.
• E) Each stock's expected return should equal its realized return as seen by the marginal investor.

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Definitions:

Producer Surplus

The difference between the amount producers are willing to sell a good for and the amount they actually receive.

Price Ceiling

A government-imposed limit on how high a price is charged for a product, service, or commodity, intended to protect consumers from high prices.

Persistent Shortage

A situation where the demand for a good or service consistently exceeds its supply, over a significant period of time.

Deadweight Loss

The loss of economic efficiency when the equilibrium for a good or a service is not achieved or is not achievable.