If Supply Increases and Demand Decreases, the New Equilibrium Price

question 22

Multiple Choice

If supply increases and demand decreases, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.

• A)lower; lower
• B)lower; uncertain
• C)higher; higher
• D)higher; uncertain

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Definitions:

Stock C

A generic term that could refer to a third class of stock; however, without specific context, its meaning can vary.

Arbitrage Pricing Theory

A theory that designs to predict the price of assets by considering the relationship between a financial asset's returns and the macroeconomic factors that directly affect it.

Expected Return

The anticipated value or profit generated by an investment over a given period, factoring in all potential outcomes and their probabilities.

Systematic Risk

The danger that affects all investments within an entire market or a specific sector, commonly referred to as market risk or non-diversifiable risk.