In a General Equilibrium Setting, the Supply Curves for Final

question 8

Multiple Choice

In a general equilibrium setting, the supply curves for final goods and services are determined by:

• A)profit maximization by firms.
• B)cost minimization by firms.
• C)profit maximization by consumers.
• D)utility maximization by consumers.

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Definitions:

Separation Property

The property that portfolio choice can be separated into two independent tasks: (1) determination of the optimal risky portfolio, which is a purely technical problem, and (2) the personal choice of the best mix of the risky portfolio and the risk-free asset.

Risky Portfolio

An investment portfolio that contains assets with a higher degree of risk, potentially leading to higher returns or greater losses.

Complete Portfolio

The entire portfolio, including risky and risk-free assets.

Optimal Risky Portfolio

A combination of investments that yields the highest expected return for a specific level of risk.