Use the Following to Answer Questions

question 198

Multiple Choice

Use the following to answer questions:
-(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets. The market for gadgets consists of two producers, Margaret and Ray. Each firm can produce gadgets with no marginal cost or fixed cost. If industry output is 350 gadgets produced by Margaret and 250 gadgets produced by Ray and if Ray decides to increase output by 100, Margaret's profit will be _____ and Ray's profit will be _____.

• A) $1,750; $1,250
• B) $1,250; $1,250
• C) $1,400; $1,000
• D) $1,050; $1,050

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Definitions:

Diversifiable Risk

A risk that can be reduced or eliminated from a portfolio through diversification, not linked to the market's movements as a whole.

Company-Specific

Company-Specific refers to factors or risks that affect an individual company's performance, distinct from broader market or industry factors.

Unsystematic Risk

The risk associated with a specific company or industry, which can be mitigated through diversification.

Beta Coefficient

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher than market volatility.