Rent Seeking Occurs When

question 130

Multiple Choice

Rent seeking occurs when

• A) resources are used to deregulate a market through the political process.
• B) resources are used to maximize profits.
• C) resources are used to secure monopoly rights through the political process.
• D) two firms try to enter the same market.
• E) landlords attempt to raise the rent on tenants.

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Definitions:

Market Risk Premium

The market risk premium is the additional return an investor expects from holding a risky market portfolio instead of risk-free assets.

Risk-Free Rate

The theoretical rate of return on an investment with no risk of financial loss, often represented by government bonds.

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher than market volatility, while a beta less than 1 indicates lower.

Required Rate of Return

A rephrasing of Required Return; the minimum annual percentage earned by an investment that will entice an individual or company to invest money.