Market risk is:
A. likely to be predictable, and generally reflected in interest rates.
B. risk that is unique to a particular company or asset.
C. the reason the economy suffers inflation from time to time.
D. risk that is broadly shared by the entire market or economy.
Answer: D
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Asymmetric information means
A) some market participants have more information than others. B) some news are more important than others. C) some market participants interpret news differently. D) the impact of news on economic outcomes depends on the context.
Externalities are commonly generated from
a. purely competitive retail industries. b. modern computer technologies. c. ordinary consumption and production activities. d. benefits from further pollution abatement, which are zero.
Because every policy change generates winners and losers, loss aversion generates:
A. status quo bias. B. anchoring and adjustment. C. fungibility. D. regression to the mean.
A monopoly misallocates resources when it
A. restricts output so that the marginal benefit of the last unit sold exceeds the marginal social cost of producing the good. B. exploits scale economies. C. makes an above-normal profit. D. sells the same product to different groups of customers at different prices.