Which of the Following Should Be Rejected as an Important

question 67

Multiple Choice

Which of the following should be rejected as an important reason for higher wages in the United States than in Mexico?

• A)The Mexican demand curve for labor is lower because the marginal productivity of labor in Mexico is low.
• B)Mexico has much less capital to work with.
• C)Average educational levels are lower for Mexican workers.
• D)Technology is used more intensively in U.S.production processes.
• E)Most workers in the U.S.belong to unions.

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Definitions:

Optimal Risky Portfolio

A portfolio that offers the highest expected return for a given level of risk or the lowest risk for a given level of expected return, according to modern portfolio theory.

Risk Free Rate

The theoretical return on an investment with zero risk, often represented by government bonds or treasury bills of a stable country.

Standard Deviation

A statistical measurement that sheds light on the dispersion or spread of a set of numbers or data points around the mean value.

Diversifiable Risk

A type of investment risk that can be reduced or eliminated through portfolio diversification, as opposed to systemic risk which affects all investments.