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According to the Efficient Markets Hypothesis, What Changes the Price

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Essay

According to the efficient markets hypothesis, what changes the price of a share of a corporation's stock? Make up an example.


Definitions:

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, representing surplus remaining after all costs are covered.

Perfectly Competitive

A market scenario characterized by an infinite number of buyers and sellers, freedom of entry and exit, and a product that is homogenous across all suppliers.

Constant-Cost Industry

An industry where the costs of production do not change as the industry's output changes.

Long-Run Equilibrium

A state in economic theory where all factors of production are fully adjustable, allowing for optimal resource allocation and full competition.

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