According to the Supply and Demand Model,when the Cotton Gin

question 134

Multiple Choice

According to the supply and demand model,when the cotton gin was invented and if all else was held constant,we would expect the equilibrium price of cotton to ________ and the equilibrium quantity of cotton to ________.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease
• E) remain the same; increase

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Definitions:

APT

APT, or Arbitrage Pricing Theory, is a financial model that estimates the returns on an asset based on its risk in relation to multiple risk factors.

Well-Diversified Portfolio

A collection of investments that spread out risk by incorporating a wide variety of assets, thereby minimizing the impact of any single asset's performance on the overall portfolio.

Fama and French

Two economists known for their research on the factors that influence stock returns, notably the three-factor model which includes market risk, size, and value factors in explaining stock returns.

Multifactor Model

A financial model that evaluates securities by considering multiple economic and financial factors to explain asset prices and predict investment returns.