Explain why the rate of return from investing in stocks is higher than from investing in bonds
What will be an ideal response?
Most people are risk averse. They only make investments if the rate of return on a risky investment exceeds the rate of return on a less risky investment by a risk premium. Stock are more risky because they have more non-diversifiable risks. Thus, stocks must include a risk premium in their return to attract investors.
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Which principle states that as the production of one good expands, the opportunity cost of producing another unit of this good generally increases?
A. Principle of total cost B. Principle of increasing cost C. Principle of opportunity cost D. Principle of increasing marginal utility
Which of the following is an objective of fiscal policy?
A) high rates of economic growth B) discovering a cure for AIDs C) energy independence from Middle East oil D) health care coverage for all Americans E) homeland security
At any quantity, the marginal factor cost is always
A) parallel to the marginal revenue product. B) below the labor supply curve. C) above the labor supply curve. D) above the labor demand curve.
Jim is haggling with a car dealer over the sale price of a used car. When he entered the store, it was empty. During the negotiations, a second customers walks in, interested in that particular car, and the storekeeper rejects Jim's offer. This is because
a. The car dealer's disagreement value decreased b. The car dealer's disagreement value increased c. The car dealer's disagreement value did not change d. None of the above