Splitting money across different investments (diversification) reduces risk but also reduces the rate of return, according to the risk-return principle.
Answer the following statement true (T) or false (F)
False
Diversification can reduce risk without reducing the average rate of return.
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Max has allocated $100 toward meats for his barbecue. His budget line and an indifference map are shown in the above figure. Which of the following best describes Max's preferences?
A) d > b > e B) d = b = e C) a = b > c D) a = b > e
A decrease in the rate of interest, other things being equal, will cause a:
a. rightward shift of the investment demand curve. b. movement upward along the investment demand curve. c. movement downward along the investment demand curve. d. leftward shift of the investment demand curve.
Exhibit 7-3 Cost per unit curves
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As shown in Exhibit 7-3, the price at which the firm earns zero economic profit in the short-run is:
A. $1.00 per unit. B. $1.50 per unit. C. $2.00 per unit. D. $4.00 per unit.
The demand curve represents the relationship between:
A. income and quantity demanded with everything else held constant. B. income and price demanded with everything else held constant. C. consumer preferences and quantity demanded with everything else held constant. D. price and quantity demanded with everything else held constant.