Consider the Following Demand and Supply Curves: Q^d = 100

question 64

Multiple Choice

Consider the following demand and supply curves: Q^d = 100 - 2P,and Q^s = ½ P,calculate the equilibrium P and Q for this initial situation and assuming the demand curve changes to Q^s = 100 - P.Which of the following is correct?

• A) the initial equilibrium is P = 40, Q = 20 and the demand curve shifts left.
• B) the initial equilibrium is P = 40, Q = 20 and the new equilibrium is P = 36, Q = 28.
• C) the initial equilibrium is P = 40, Q = 20 and the new equilibrium is P = 66 2/3 and Q = 33 1/3.
• D) the initial equilibrium is P = 40, Q = 20 and the demand curve shifts right.

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Definitions:

Asset Allocation

The investment strategy of dividing a portfolio among different asset categories, such as stocks, bonds, and cash to minimize risk and maximize returns.

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A systematic approach or series of steps taken by investors or fund managers to identify, select, and allocate funds to various securities or investments to achieve specific financial goals.

Systemic Risk

The risk of collapse of an entire financial system or entire market, due to the failure of a single entity or group.