Continuing to Operate a Fuel-Inefficient Car Despite Warnings About the Effect

question 65

Multiple Choice

Continuing to operate a fuel-inefficient car despite warnings about the effect of greenhouse gases best illustrates the dynamics of

• A) social loafing.
• B) a social trap.
• C) the fundamental attribution error.
• D) the mere exposure effect.

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Definitions:

Risk Aversion

The preference of investors to avoid risk, leading them to invest in safer securities with lower potential returns.

Optimal Risky Portfolio

A collection of financial investments that has the highest expected return for a given level of risk.

Risk-Free Asset

An investment with a guaranteed return, with no risk of financial loss, typically represented by government bonds.

Harry Markowitz

He is an economist renowned for his pioneering work in portfolio theory, establishing the basis for modern portfolio management with his concepts of diversification and risk-return optimization.