Answers to a question of "The stock market can be very volatile"
Added on 2021-06-17
20 Pages4135 Words59 Views
Running head: ECONOMICS ASSIGNMENTEconomics AssignmentName of the studentStudent IDName of the universityAuthor Note
1ECONOMICS ASSIGNMENTTable of ContentsAnswer 1:...................................................................................................................................3Answer 2:...................................................................................................................................3a).............................................................................................................................................3b)............................................................................................................................................4c).............................................................................................................................................5d)............................................................................................................................................5e).............................................................................................................................................6Answer 3:...................................................................................................................................6a).............................................................................................................................................6b)............................................................................................................................................7c).............................................................................................................................................8Answer 4:...................................................................................................................................9a)...........................................................................................................................................10b)..........................................................................................................................................11c)...........................................................................................................................................12Answer 5:.................................................................................................................................13a)...........................................................................................................................................13b)..........................................................................................................................................13c)...........................................................................................................................................13d)..........................................................................................................................................14
2ECONOMICS ASSIGNMENTAnswer 6:.................................................................................................................................14a)...........................................................................................................................................14b)..........................................................................................................................................15References:...............................................................................................................................17
3ECONOMICS ASSIGNMENTAnswer 1:The stock market can be referred as perfectly competitive market because of the largenumber of groups. This market consists with four groups, viz., public corporations, buyers,sellers and market makers. In this market, sellers refer as shareholders, who exchange theirstock for cash. Some shareholders of BP (British Petroleum) are Barrow Hanley Mewhinneyand Strauss, Status Street Corporation, Dimensional Fund Advisors, Franklin Advisers Inc.and Wellington management Company and so on (Chaplinsky, Lynch and Doherty 2017).One of the chief assumptions of a perfectly competitive market is the homogeneity ofproducts that means, each seller sells same products (Özdemir, Munoz, Ho and Hobbs 2016).This is also true for stock market. Another assumption of perfectly competitive market is thatno seller or buyer can influence the market price of this similar product and consequentlythose persons become the price taker. This is also true for the stock market, whereshareholders cannot change price for shares of BP. Moreover, shareholders of BP can freelyenter or exit from the market and this is another assumption of perfect competition. Thisimplies that shareholders do not sell any unwanted things in market and for this shareholdersof BP can freely enter or exit from this market. Answer 2:a)The market demand curve for egg is P= 1000 – 2QThe market supply curve for egg is P = 100+ QThese two equations are required to equate with each other for getting equilibriumquantity and price in the market (Kolmar and Hoffmann 2018).Hence, equilibrium quantity in the market is1000 – 2Q = 100+ Q2Q + Q = 1000 – 100
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