Susan Is Investing in the Stock Market

question 11

Multiple Choice

Susan is investing in the stock market.She is choosing among a variety of stocks; each stock has an expected return and a level of risk attached.Susan likes higher returns,but she dislikes risk.If we were to draw indifference curves for Susan over risk and expected return,they would be:

• A) L-shaped.
• B) linear.
• C) upward-sloping.
• D) downward-sloping.
• E) vertical lines.

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Definitions:

Costs and Benefits

Refers to the analysis or evaluation of the negative and positive effects or outcomes of a decision, action, or policy.

Monopolistic Competition

A market structure characterized by many producers selling products that are similar but not identical, allowing for competition.

Industry Entry and Exit

The process by which new competitors enter and existing firms exit a market or industry, often influenced by barriers to entry, market competition, and profitability.

Long-Run Profits

Long-run profits are the earnings a firm expects to achieve over a period during which all inputs, including capital, can be fully adjusted.