Assume That the Equilibrium Price for a Good Is $5

question 158

Multiple Choice

Assume that the equilibrium price for a good is $5. If the market price is $10, a:

• A) shortage causes the price to decline toward $5.
• B) surplus causes the price to rise above $10.
• C) shortage causes the price to rise above $10.
• D) surplus causes the price to decline toward $5.

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Definitions:

Geometric Average Return

A method for calculating the average rate of return on an investment, which accounts for the effects of compound interest.

Rates of Return

The gains or losses on an investment over a specified period, expressed as a percentage of the investment's cost.

Normal Distribution

A bell-shaped frequency distribution curve that is symmetrical about the mean, showing how data points, like stock returns, are dispersed or spread out.

Standard Deviation

Standard deviation is a statistical measure of the dispersion or variance in a dataset, commonly used to assess volatility in finance.