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In Response to a Surplus the Market Price of a Good

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In response to a surplus the market price of a good will fall; as the price falls, the quantity demanded will increase and quantity supplies will decrease until equilibrium is reached.


Definitions:

CAPM

The Capital Asset Pricing Model, a theoretical framework used to determine the expected return on an investment based on its risk in comparison to the market.

Systematic Risk

A type of risk associated with the entire market or a particular market segment that remains unaffected by diversification efforts.

Risk Free Rate

The rate of return on an investment with no risk of financial loss, often represented by government bonds.

Beta

A calculation of the extent to which a stock's price swings in comparison with the overall market.

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