If the Quantity Effect Outweighs the Price Effect of a Price

question 54

Multiple Choice

If the quantity effect outweighs the price effect of a price increase, then demand is:

• A) elastic.
• B) inelastic.
• C) unit elastic.
• D) normal.

---

Definitions:

Market Portfolio

A theoretical portfolio that includes all assets available in the market, with each asset weighted by its market capitalization.

Beta

A benchmark for evaluating the volatility or systematic risk of a security or portfolio vis-à-vis the wider market.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, often represented by the yield on government securities.

Market Portfolio

A theoretical bundle of investments that includes all types of assets available in the market, with each asset weighted by its market capitalization.