Which of the Following Is NOT a Diversifiable Risk

question 8

Multiple Choice

Which of the following is NOT a diversifiable risk?

• A) the risk that oil prices rise, increasing production costs
• B) the risk that the CEO is killed in a plane crash
• C) the risk of a key employee being hired away by a competitor
• D) the risk of a product liability lawsuit

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Definitions:

Kinked Demand Curve Model

A model in oligopoly markets suggesting that firms may not change their prices because an increase could be ignored by rivals, while a decrease might be matched.

Price Stability

A situation in an economy where prices in general do not change significantly over time, minimizing uncertainty and conducive to economic growth.

Oligopolies

Market structures characterized by a small number of firms that have significant market power, which can influence prices and output levels.

Cartels

Formal agreements among competing firms to control prices, production, and distribution of goods, often to restrict competition and increase profits illegally.