What Happens If Sellers Respond Substantially to Changes in Price

question 156

Multiple Choice

What happens if sellers respond substantially to changes in price

• A)The supply curve will shift substantially when the price rises.
• B)Sellers are considered to be relatively price insensitive.
• C)Sellers are considered to be relatively price sensitive.
• D)The price elasticity of supply equals 1.

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Definitions:

Risky Stocks

Investments in the stock market that carry a high level of risk, typically due to volatility, lack of predictability, or the potential for substantial loss.

Market

A medium that allows buyers and sellers to exchange goods, services, or information.

Highly Competitive Market

A market structure characterized by a large number of sellers and buyers, leading to competitive pricing and minimal market power for individual firms.

Security Market Line

A representation in the capital asset pricing model (CAPM) that displays the relationship between the expected return of a security and its systemic risk.