securities and exchanges commission
To: Securities and Exchange CommissionFrom: Bryan Economic Analysis, Inc.Re: Report on Stock Prices of Internet Companies In Response to the SEC memorandum regarding the adoption of the policy of capping the stock prices of internet-related companies at 90% of their current value, Bryan Economic Analysis, Inc. has come to the following conclusions. Bryan Economic Analysis, Inc. agrees that if something is not done regarding the price of stock of internet-related companies, a drastic drop in the price of these stocks will eventually occur. This drop in the price of these stocks will have an incredibly adverse effect on the state of the US economy and the world stock market in general. The problem of this venture would be that capping of stock prices will result in temporary inefficiencies and a shortage in the market for stocks. However, the capping of stock prices is highly necessary to the future of the US economy. If the prices of these stocks continue to rise without check, the inevitable drop
At the original price, these people could have bought the stock, but because the price was lowered beneath the equilibrium, they no longer have the opportunity. Again, this doesn't involve a shift in the supply curve, only movement along it. If something were not done, the US economy and the world's financial markets would experience devastating consequences. The effect of adopting this policy would be the on come of a shortage in the market. In this situation, there is not enough supply to meet the demand of the economy. However, because of the price cap, the price of stock will not exceed 90% of its original price. The Importance The fate of the US economy depends on the capping of the stock prices of internet-related companies. The higher price would decrease quantity demanded and increase quantity supplied until the two were at equilibrium. that the price cap for stocks of internet-related companies in highly necessary for the continuation of a stable and prosperous economy. There is, however, a group who benefits from the price cap. The demand curve itself would not shift; rather there would be movement along the demand curve. These people benefit from the new lower price caused by the price cap. Second, the lowering of the stock price by 10% would cause a decrease in the quantity of stocks supplied, because the sellers are less willing to sell at the lower price. The Answer It is obvious to Bryan Economic Analysis, Inc. Who Gets Hurt? Who Benefits?The stockholders who own the stock of internet-related companies will be adversely affected, because their stocks will be worth less (only 90% of their original price).
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