An Increase in the Demand for Peanuts Due to Changes

question 84

Multiple Choice

An increase in the demand for peanuts due to changes in consumer tastes,accompanied by an increase in the supply of peanuts as a result of favorable growing conditions,will result in

• A)an increase in the equilibrium quantity of peanuts and no change in the equilibrium price.
• B)an increase in the equilibrium price of peanuts and no change in the equilibrium quantity.
• C)an increase in the equilibrium price of peanuts; the equilibrium quantity may increase or decrease.
• D)an increase in the equilibrium quantity of peanuts; the equilibrium price may increase or decrease.

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Definitions:

Intrinsic Value

The fundamental, true value of an asset based on its characteristics and cash flow, independent of its current market price.

Beta

A measure of a stock's volatility in relation to the overall market, indicating the stock's sensitivity to market movements.

Risk-Free Rate

A hypothetical interest rate associated with an absolutely risk-free investment, typically exemplified by government securities.

Market Portfolio

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