#1
Which concept explains that financial markets are efficient in reflecting information about stock prices?
Efficient Market Hypothesis
ExplanationFinancial markets efficiently reflect stock price information.
#2
Which principle states that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded will equal the quantity supplied?
Law of Supply and Demand
ExplanationLaw of Supply and Demand: equilibrium reached where demand equals supply.
#3
What is the primary goal of market regulation?
To protect consumers, ensure fairness, and prevent monopolies
ExplanationMarket regulation aims to protect consumers, ensure fairness, and prevent monopolies.
#4
In the context of consumer-producer dynamics, what does 'consumer surplus' refer to?
The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually do pay
ExplanationConsumer surplus: difference between what consumers are willing to pay and what they actually pay.
#5
Which of the following is NOT a form of market efficiency?
Distributive efficiency
ExplanationDistributive efficiency is not a form of market efficiency.
#6
What does the term 'deadweight loss' refer to in the context of market efficiency?
The reduction in economic efficiency that can occur when equilibrium for a good or service is not achieved
ExplanationDeadweight loss: inefficiency from not reaching equilibrium.
#7
The concept that prices of securities fully reflect all available information is known as:
Strong-form efficiency
ExplanationStrong-form efficiency: prices reflect all available information.
#8
What does 'price elasticity of demand' measure?
The ratio of the percentage change in quantity demanded to the percentage change in price
ExplanationPrice elasticity of demand: measure of responsiveness of quantity demanded to price change.
#9
What does 'Pareto efficiency' imply in an economic context?
A situation where it is impossible to make one party better off without making someone else worse off
ExplanationPareto efficiency: impossible to improve one without harming another.