"There Can Be Too Much of a Good Thing

question 31

Multiple Choice

"There can be too much of a good thing." This statement suggests that

• A)choices made in self-interest cannot be applied to many economic decisions.
• B)a good may be produced to the point where its marginal cost exceeds its marginal benefit.
• C)certain goods and services such as education and health care are inherently desirable and should be produced regardless of costs and benefits.
• D)a good may be produced to the point where its marginal benefit exceeds its marginal cost.
• E)a good may be produced to the point where its marginal benefit is equal to its marginal cost.

Interpret beta values and their indication of a security's systematic risk level.

Understand the effects of portfolio diversification on risk.

Identify the impact of inflation and changes in risk aversion on the SML.

Calculate the expected return of portfolios and understand the role of beta in portfolio management.

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Definitions:

Eyedropper Position

The correct way to hold and use an eyedropper for administering medication directly into the eye.

Aspiration Risk

The potential danger of inhaling food, liquid, or foreign objects into the lungs, which can cause choking or respiratory complications.

Prone Position

Lying flat with the face and torso facing down, opposite of the supine position.

Supine Position

Lying on the back with the face upward, used in medical contexts for examinations or treatments.