When risks are shared across many different assets or people, reducing the impact of any particular risk on any one individual, it is called:
A. diversification.
B. risk pooling.
C. risk aversion.
D. risk analysis.
A. diversification.
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The government has hired you to advise them on the merits of a project that is being proposed. The project is expected to generate benefits of 14 million dollars today, 5 million dollars in one year from today, and 1 million dollars in two years from today. (These are the only years of concern.) The project costs nothing today, but will cost 20 million dollars in two years. Assume the interest rate is 10%. If the benefit-cost ratio is greater than 1, the project should be allowed. What is your policy suggestion?
What will be an ideal response?
In April, market analysts predict that the price of titanium will fall in May. What happens in the titanium market in April, holding everything else constant?
A) The demand curve shifts to the right.
B) The supply curve shifts to the left.
C) The quantity demanded and the quantity supplied increase.
D) The supply curve shifts to the right.
If a teacher was curious to see if collaboration among students leads to higher grades, which of the following models would be the best to use?
A. Traditional models B. Regression models C. Butterfly effect model D. Heuristic models
In the above figure, S1 represents the supply curve which includes private costs, and S2 is the supply curve which includes social costs. If the firm is producing a product that has external costs that the firm does NOT have to pay, what will be the equilibrium price and quantity?
A. P3, Q2 B. P1, Q4 C. P4, Q1 D. P2, Q3