Suppose the Equilibrium Price of Tickets to a Shania Twain

question 58

Multiple Choice

Suppose the equilibrium price of tickets to a Shania Twain concert is $40 per ticket. Currently tickets are priced at $55 per ticket. We would expect to find:

• A) excess supply and the price of tickets falling.
• B) excess supply and the price of tickets rising.
• C) excess demand and the price of tickets falling.
• D) excess demand and the price of tickets rising.

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Definitions:

Risk Premiums

The extra return expected by investors for taking on the risk of an investment compared to a risk-free asset.

Mean-variance Efficient

A portfolio that offers the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.

CAPM

The Capital Asset Pricing Model is a conceptual model employed to calculate the anticipated return on an investment, taking into account both the risk associated with the investment and the time value of money.

Market Portfolio

A theoretical portfolio that includes all assets available in the market, each weighted by its market capitalization, often used in the Capital Asset Pricing Model (CAPM).