Generally, on a Linear Two-Good Production Possibilities Curve, the Opportunity

question 41

Multiple Choice

Generally, on a linear two-good production possibilities curve, the opportunity cost of the good measured on the vertical axis is:

• A) one minus the opportunity cost of the good measured on the horizontal axis.
• B) the reciprocal of the opportunity cost of the good measured on the horizontal axis.
• C) the slope of the production possibilities line.
• D) the negative of the opportunity cost of the good measured on the horizontal axis.

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Definitions:

Semistrong Efficiency

A form of market efficiency that asserts all public information is reflected in stock prices, alongside past trading information.

Market Anomalies

Price patterns or other market behaviors that deviate from the efficient market hypothesis and could potentially be exploited for profit.

Abnormal Returns

The earnings on a stock (or portfolio) that exceed what would be predicted by an equilibrium model like the CAPM.

Inside Trades

Trading activities based on material, non-public information about a company, which is illegal in many jurisdictions.