You Are Considering Investing in U

question 56

Multiple Choice

You are considering investing in U.S. Steel. Which of the following is an example of nondiversifiable risk?

• A) Risk resulting from foreign expropriation of U.S. Steel property
• B) Risk resulting from oil exploration by Marathon Oil (a U.S. Steel subsidy)
• C) Risk resulting from a strike against U.S. Steel
• D) None of the above

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Definitions:

Extra Output

The additional production that is generated as a result of adding more of a variable input, such as labor or capital.

Diminishing Returns

A principle stating that as additional amounts of a variable input are added to a fixed input, beyond some point the marginal product of the variable input begins to decrease.

Unit of Labor

A measure of labor input, often represented by one worker or one hour of work, used to calculate productivity or costs.

Marginal Cost

The price of fabricating another unit of a good or service.