Sometimes the Response to Price Signals,rather Than the Signals Themselves,may

question 65

True/False

Sometimes the response to price signals,rather than the signals themselves,may be flawed.
The market may fail even when the price signals are accurate.The response to price signals,rather than the signals themselves,may be flawed.For example,there may be externalities present.

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Definitions:

Covariance

A measure of how two variables move together, indicating the direction of their relationship.

Correlation Coefficient

A numerical indicator that determines the intensity of the association between the relative changes of two variables.

Standard Deviations

A measure of the amount of variation or dispersion of a set of values, indicating how much the values differ from the mean of the set.

Expected Returns

The predicted average return of an investment portfolio over a specified period.