The Three Tools Used Repeatedly in Microeconomic Analysis Are

question 28

Multiple Choice

The three tools used repeatedly in microeconomic analysis are:

• A)unconstrained optimization, comparative equilibrium, equilibrium statics.
• B)opportunity cost, scarce resources, shifting equilibrium.
• C)restricted analysis, constrained equilibrium, optimization.
• D)constrained optimization, equilibrium analysis, comparative statics.

---

Definitions:

Alpha

In investing, alpha is a measure of the performance of an investment relative to a suitable benchmark index, indicating excess or deficient return.

Security

A financial instrument representing ownership in a publicly-traded corporation (stock), a creditor relationship with a government or corporation (bond), or rights to ownership as represented by an option.

Rate of Return

The profit or deficit from an investment during a designated time frame, represented as a fraction of the investment's initial value.

Security Market Line

A graphical representation that shows the relationship between the risk of an investment and its expected return, based on the capital asset pricing model.