A Risk That Affects Only Individuals or Small Groups and Not

question 54

Multiple Choice

A risk that affects only individuals or small groups and not the entire economy is called a

• A)diversifiable risk.
• B)pure risk.
• C)speculative risk.
• D)nondiversifiable risk.

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Definitions:

Total Cost Function

Describes the complete cost of producing a given level of output, summing up all variable and fixed costs associated with production.

Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Long-Run Cost Curve

A graphical representation that shows the minimum cost at which any output level can be produced when all inputs are variable.

Economic Profits

The difference between total revenue earned from production and the total opportunity costs of all inputs used in the production process.