If stocks are more risky than bonds, why would a rational investor ever buy stocks?
Although stocks are more risky than bonds, the probable rate of return is also higher for stocks. For a higher return, some investors are willing to accept the higher risk. In addition, with diversification, it is possible to reduce the risk of the portfolio of investments. Although the risk of each individual stock may be high, the risk of the portfolio will generally be much lower. The rational investor will select a portfolio that gives acceptable risk for the expected return.
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A monopolist currently sells 18 units of a good. If marginal revenue on the last unit sold is $117, then the price of the good must be less than $117
Indicate whether the statement is true or false
If the government removes a binding price ceiling in a market, then the producer surplus in that market will increase
a. True b. False Indicate whether the statement is true or false
Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?
a. The effective price received by sellers is $0.40 per bottle less than it was before the tax. b. Sixty percent of the burden of the tax falls on sellers. c. This tax causes the demand curve for perfume to shift downward by $1.00 at each quantity of perfume. d. All of the above are correct.
The economizing problem is:
A. the need to make choices because economic wants exceed economic means. B. how to distribute resources equally among all members of society. C. that people's means often exceed their wants. D. that people do not know how to rationally allocate resources.