Suppose Each Worker Must Use Only One Shovel to Dig

question 12

Multiple Choice

Suppose each worker must use only one shovel to dig a trench,and shovels are useless by themselves.In the short run,an increase in the price of shovels will result in

• A) fewer shovels being purchased.
• B) more workers being hired.
• C) a decrease in the firm's output.
• D) no change in the firm's output.

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Definitions:

Miller and Scholes

Refers to economists Merton Miller and Myron Scholes, noted for their contributions to the field of finance, including work on the pricing of options and corporate finance.

Nonsystematic Risk

The portion of investment risk that is unique to an individual asset or company, such as management decisions or product recalls, and can be mitigated through diversification.

Security Market Line

A graphical representation of the expected return of investments at different levels of risk, showing the relationship between risk and return in the capital asset pricing model.

Security Market Line

A graphical representation used in the Capital Asset Pricing Model (CAPM) that shows the relationship between the expected return of an investment and its risk.