In Which of the Following Situations Will the Equilibrium Price

question 26

Multiple Choice

In which of the following situations will the equilibrium price of wheat increase and the change in the equilibrium quantity of wheat be indeterminate?

• A)if supply and demand both decline
• B)if supply and demand both rise
• C)if supply declines and demand rises
• D)if supply rises and demand declines
• E)if supply remains constant and demand rises

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Definitions:

Efficient Market Hypothesis

A theory that suggests market prices fully reflect all available information, making it impossible to consistently achieve higher than average returns.

Random Walk

The hypothesis that stock market prices evolve according to a random path, making it impossible to consistently predict their future direction.

Index Funds

A type of mutual fund with a portfolio constructed to match or track the components of a financial market index, such as the S&P 500, aiming to offer broad market exposure, low operating expenses, and low portfolio turnover.

Moral Hazard

A situation where one party engages in risky behavior or fails to act in good faith because another party bears the consequences or costs.