If Investors Started to Prefer Investing in More Ethical Companies

question 292

Multiple Choice

If investors started to prefer investing in more ethical companies, then it would be expected that the stock prices for those companies would

• A) increase, and the rates of return would decrease relative to other companies.
• B) increase, and the rates of return would increase relative to other companies.
• C) increase, but the rates of return would stay the same relative to other companies.
• D) decrease, and the rates of return would decrease relative to other companies.

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Definitions:

Backward-Bending

Describes a labor supply curve that bends backwards at higher wage rates, indicating that higher wages can lead to a decrease in labor supplied due to income effects.

Engel Curve

A graphical representation showing the relationship between a consumer's income and the quantity of a good consumed, keeping all other factors constant.

Total Effect

The overall impact on a dependent variable when one or more independent variables change.

Price Change

An alteration in the cost of goods and services in the market, which can be due to various factors like inflation, supply and demand changes, or external economic conditions.