Briefly explain the difference between idiosyncratic risk and systematic risk. Provide an example of each.
What will be an ideal response?
Systematic risk is risk resulting from something that will impact all firms, such as a general slowdown in the economy. Idiosyncratic risk will impact specific firms or industries, such as a harmful bacterium that is discovered in beef.
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Refer to the scenario above. Which of the following will be true if Harry is known to be trustworthy?
A) The outcome will be a Nash equilibrium. B) The equilibrium outcome will be socially inefficient. C) Unique equilibrium will not occur. D) Multiple equilibria will occur.
Why have so many regional trade arrangements among developing countries failed? Why might MERCOSUR have a better chance for success than the East African Common Market?
What will be an ideal response?
Profit can be maximized only where marginal revenue equals
A. average cost. B. total cost. C. marginal cost. D. average cost.
The regional Federal Reserve bank presidents are:
A. are responsible for regulatory oversight and implementation of monetary policy of regional banks. B. allowed to serve no more than two consecutive four-year terms. C. directly affiliated with other governmental agencies. D. selected by the Federal Reserve Board of Directors.