The Figure Given Below Shows the Aggregate Demand and Supply

question 105

Multiple Choice

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7

-If a firm has a perfectly elastic demand curve, then:

• A)it must be a monopoly firm.
• B)it can charge any price it desires.
• C)the firm has significant market power.
• D)the firm has no market power.
• E)the firm should shut down.

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Definitions:

Index Model

A statistical model to represent the returns of a security or a portfolio as a function of the returns of the market as a whole, along with random error.

Market Return

The overall return generated by the stock market or a specific segment of the market, over a given period.

Residual

The amount remaining after the major part or parts have been accounted for; in finance, often refers to the remainder left after specific calculations, such as dividends from a corporation after major expenses are paid.

Market Index

A measurement of the performance of a specific "basket" of stocks considered to represent a particular market or sector.