A Vertical Demand Curve Results in

question 95

Multiple Choice

A vertical demand curve results in

• A) no change in quantity when the supply curve shifts.
• B) no change in price when the supply curve shifts.
• C) no change in the supply curve being possible.
• D) no change in quantity when the demand curve shifts.

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Definitions:

Capital Allocation Line

A line in investment graph that shows the risk-reward profiles of various portfolios, combining a risk-free asset with a risky portfolio to maximize returns.

Risk-free Asset

An investment with a guaranteed return and no chance of default, such as government bonds.

Risk Aversion

The preference to avoid risk, where investors require higher returns to compensate for higher risk.

Expected Returns

The average of all possible returns for an investment, weighted by the likelihood of each outcome.