The Demand for Corn Increases

question 28

Multiple Choice

The demand for corn increases. As a result, the price of corn will _______ and, the less elastic the supply of corn, the _______ will be the effect on the price.

• A) rise; greater
• B) fall; greater
• C) fall; smaller
• D) rise; smaller

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Definitions:

Overpriced

Describes an asset or security that is believed to be trading at a price higher than its intrinsic value.

Underpriced

A term used to describe a security or any financial instrument that is selling for a price believed to be below its true intrinsic value.

Well-diversified Portfolio

An investment portfolio that spreads risk by holding a wide variety of assets, potentially across different asset classes, sectors, and geographies.

Unsystematic Risk

Refers to the risk associated with specific entities, such as companies or industries, that can be mitigated through diversification.