The "Efficient Frontier" Indicates

question 39

Multiple Choice

The "efficient frontier" indicates

• A) alternatives with neutral combinations of risk and return.
• B) alternatives with the highest returns.
• C) alternatives with the best combination of risk and return.
• D) alternatives with no risk.

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Definitions:

Long-Run Adjustment

The process by which firms adjust their production capacity and input usage to new market conditions over time, beyond short-term fluctuations.

Returns To Scale

Rate at which output increases as inputs are increased proportionately.

Increasing Marginal Product

A situation where each additional unit of input results in an increased amount of output.

Economic Rents

Extra earnings above the minimum amount necessary to keep a factor of production in its current use.