When the Price of a Good Is

question 474

Multiple Choice

When the price of a good is

• A) below the equilibrium price, quantity supplied exceeds quantity demanded and price rises.
• B) below the equilibrium price, quantity demanded exceeds quantity supplied and price falls.
• C) above the equilibrium price, quantity supplied exceeds quantity demanded and price falls.
• D) above the equilibrium price, quantity demanded exceeds quantity supplied and price rises.

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Definitions:

Risk-Free Economic Profits

Refers to theoretical profits that an investor can make without taking any market risk, which in reality is very hard to achieve due to market efficiencies.

Short Selling

Short selling is an investment strategy where an investor borrows shares and sells them on the open market, planning to buy them back later at a lower price to profit from the difference.

Equally-Weighted Portfolio

An investment portfolio where each asset is allocated the same percentage of total investment capital.

Securities

Financial instruments that hold some type of monetary value, such as stocks, bonds, or options.