Answer:
Consumers and producers in a free market economy are "free" to produce and consume what ever they want, and demand for products dictates production--whereas in a command economy, producers are told how much to produce by the government.
Explanation:
In a free market economy is where the individuals who are the producers, make their own decisions on what products to produce and sell.In this type of market, the government does not intervene. The advantage of this system is that producers have full control to produce products of their choice and they are more multivated to work and produce goods to earn money.This also boosts the economy growth by allowing the total control to the producers who produce goods according to the demand of the market.
Hello. You have not submitted the text to which this question refers. This makes it impossible for your question to be answered. However, I will try to help you in the best possible way.
It is only possible to answer this question by reading the two texts. Also, this is a personal question so first of all, you should reflect on what you think about the dangers that social media can offer to users. Do you think social media can influence you incorrectly? do you think social media can impose negative standards on society? Do you think that social media can promote exaggerated exposure? These are some concepts that you can reflect on to create your opinion about the dangers that social media can cause.
Then, you should read both texts and pay attention to how the authors approach these dangers and which author managed to present an argument that most closely resembles the opinion you have on this subject.
Therefore, you must answer this question by showing how you and this author present similar arguments and opinions.
Other things held constant, if the expected inflation rate DECREASES, and investors also become MORE risk averse, the Security Market Line would shift in<u> have a steeper slope </u>manner.
<h3>What is the Security Market Line (SML)?</h3>
The security market line (SML) is the Capital Asset Pricing Model (CAPM). It gives the market’s expected return at different levels of systematic or market risk. It is also called the ‘characteristic line’ where the x-axis represents the asset’s beta or risk, and the y-axis represents the expected return.
<u>Security Market Line Equation</u>
The Equation is as follows:
SML: E(Ri) = Rf + βi [E(RM) – Rf]
In the above security market line formula:
- E(Ri) is the expected return on the security.
- Rf is the risk-free rate and represents the y-intercept of the SML.
- βi is a non-diversifiable or systematic risk. It is the most crucial factor in SML. We will discuss this in detail in this article.
- E(RM) is expected to return on market portfolio M.
- E(RM) – Rf is known as Market Risk Premium.
<u>Characteristics of the Security Market Line (SML) are as below:</u>
- SML is a good representation of investment opportunity cost, which combines the risk-free asset and the market portfolio.
- Zero-beta security or zero-beta portfolio has an expected return on the portfolio, which is equal to the risk-free rate.
- The slope of the Security Market Line is determined by the market risk premium, which is: (E(RM) – Rf). Higher the market risk premium steeper the slope and vice-versa
- All the assets which are correctly priced are represented on SML.
- The assets above the SML are undervalued as they give a higher expected return for a given amount of risk.
- The assets below the SML are overvalued as they have lower expected returns for the same amount of risk.
Therefore, we can conclude that the correct option is A.
Learn more about Security Market Line (SML) on:
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First answer- the Battle of Long Island.
Second- Valley Forge.
Describing camp life: It was hard, there was low food supply, disease, and freezing nights.
Third- Lake Superior, Lake Ontario, Lake Michigan, Lake Erie, and Lake Huron.
Hope this helps you out.
