Physicians Salaries Increased Substantially Over the Decade 1995-2005 from an Average

question 4

Multiple Choice

Physicians salaries increased substantially over the decade 1995-2005 from an average of $215,000 to $315,000. What is the best explanation for this?

• A) Physicians were smarter in 2005 than in 1995.
• B) The supply of physicians has increased.
• C) The supply of physicians has decreased.
• D) The demand for physicians has increased.
• E) The demand for physicians has decreased.

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Definitions:

Probability Distribution

A listing, chart, or graph of all possible outcomes, such as expected rates of return, with a probability assigned to each outcome.

Security Market Line

A graphical representation that shows the expected rate of return of an asset as a function of its systematic risk.

Inherent Risk

The possibility of inaccurate financial statements due to factors other than failure of control, covering areas such as industry characteristics and overall economic environment.

SML

The Security Market Line, a graphical representation of the Capital Asset Pricing Model showing the relationship between the expected return of a security and its beta (systematic risk).