An Increase in Demand Will Cause a Relatively Small Increase

question 116

Multiple Choice

An increase in demand will cause a relatively small increase in price when

• A) the increase in demand is large.
• B) demand is highly inelastic.
• C) supply is highly elastic.
• D) all of the above

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Definitions:

Serial Correlation

The association between successive observations of the same variable, such as stock returns, over time.

Tax-Loss Selling

The strategy of offloading securities at a loss in order to reduce the liability of capital gains tax.

Trading Pattern

The analysis of price movements in financial markets to anticipate future movements based on historical, statistical trends.

Strong-Form EMH

A theory in financial economics that states all information, public and private, is fully reflected in stock prices, implying no one can consistently achieve higher returns.