Suppose the State of Massachusetts Passes a Law That Increases

question 137

Multiple Choice

Suppose the state of Massachusetts passes a law that increases the tax on alcoholic beverages.As a result,residents in Massachusetts start purchasing their alcohol in surrounding states.Which of the following principles does this best illustrate?

• A) People respond to incentives
• B) Rational people think at the margin
• C) Trade can make everyone better off
• D) Markets are usually a good way to organize economic activity

Identify sources of systematic risk and their impact on investment decisions.

Distinguish between absolute and relative measures of risk, such as standard deviation and coefficient of variation.

Understand the principles of portfolio theory and the relationship between risk and return.

Describe the concept of risk aversion and its implication for investors.

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Definitions:

Avoid The Contract

To nullify or terminate a contractual agreement due to errors, fraud, or illegality.

Repudiating

A term often used in legal and financial contexts to refer to the rejection or denial of a claim, duty, or responsibility.

Capacity

In legal terms, it refers to the ability of an individual or entity to enter into a contract, including understanding its terms and being of legal age and sound mind.

Fluid Mechanics

The branch of physics concerned with the study of fluids (liquids and gases) and the forces on them, encompassing both theory and applications in engineering.