If Many Investors Quickly Sell an IPO Stock in the Secondary

question 41

Multiple Choice

If many investors quickly sell an IPO stock in the secondary market, there will be ____ on the stock's price.

• A) upward pressure
• B) downward pressure
• C) no additional pressure
• D) none of the above

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Definitions:

Economic Efficiency

A condition in which resources are allocated in the most effective way possible, maximizing outputs from given inputs without waste.

Allocative Efficiency

A state of resource allocation where goods and services are distributed according to consumer preferences, reflecting an optimal distribution of resources.

Producer Surplus

The gap between the minimum amount sellers are prepared to accept for a product or service and the actual price it sells for.

Negative Externalities

Costs that result from an activity or transaction and affect third parties who did not choose to incur that cost.