If the Market for Chocolate Was at the Equilibrium Point

question 233

Multiple Choice

If the market for chocolate was at the equilibrium point and suddenly half of the chocolate in the world disappeared, what would be the immediate effect?

• A) The price would increase due to a shortage.
• B) The price would decrease due to market equilibrium.
• C) The price would increase due to a surplus.
• D) The price would decrease due to a surplus.
• E) There would be no change in either price or demand.

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Definitions:

Covariance

A measure of the degree to which two variables move together. In finance, it is used to measure how returns on two assets are related.

Regression Analysis

A statistical method used to examine the relationship between one dependent variable and one or more independent variables.

Slope

In mathematics and economics, the slope represents the rate at which a variable changes in relation to another variable, often depicted as the rise over run on a graph.

Beta

An indicator of the fluctuation or inherent risk of a security or portfolio compared to the overall market.