For Markets to Be in Equilibrium,that Is,for There to Be

question 97

Multiple Choice

For markets to be in equilibrium,that is,for there to be no strong pressure for prices to depart from their current levels,

• A) The expected rate of return must be equal to the required rate of return;that is,= .
• B) The past realized rate of return must be equal to the expected future rate of return;that is,= .
• C) The required rate of return must equal the past realized rate of return;that is,= .
• D) All three of the above statements must hold for equilibrium to exist;that is = = .
• E) None of the above statements is correct.

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Definitions:

Fixed Factors

Resources in production that cannot be easily increased or decreased in the short term, such as land or certain machinery.

Capital-Intensive

A characteristic of industries or businesses that require large amounts of capital investment in machinery and equipment relative to labor to produce goods or services.

Firm Costs

All the expenses incurred by a company in the production and sale of goods or services, including raw materials, labor, and overhead.