When the Market Achieves Allocative Efficiency

question 112

Multiple Choice

When the market achieves allocative efficiency,

• A)marginal benefit equals marginal cost.
• B)marginal benefit is at its maximum.
• C)marginal benefit exceeds marginal cost by as much as possible.
• D)marginal cost exceeds marginal benefit by as much as possible.
• E)marginal cost is at its minimum.

Identify the legal theories and tests used to establish a design defect.

Understand the basis for breach of warranty claims.

Recognize the role of consumer expectations and risk-utility analysis in product liability lawsuits.

Understand the concept of empowerment and its components.

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Definitions:

Portfolio Beta

A measure of a portfolio's volatility relative to the market as a whole; it indicates the sensitivity of the portfolio's returns to market returns.

Unsystematic Risks

Risks that affect a specific company or industry, as opposed to the market as a whole, including management decisions or product recalls.

Well-Diversified Portfolio

An investment portfolio that spreads risk and opportunity across a wide range of assets and sectors, aiming to reduce the impact of any single investment's poor performance.

Diversifiable Risk

A type of investment risk that can be reduced through diversification, relating to factors affecting specific industries, companies, or securities rather than the market as a whole.