Which of These Displaced Workers Is Likely to Be Most

question 39

Multiple Choice

Which of these displaced workers is likely to be most harmed by losing their job due to foreign trade?

• A) Worker A who has firm-specific skills.
• B) Worker B who has general skills.
• C) Worker C who has a very elastic supply curve of labor.
• D) Worker D who spends a large fraction of her income on imported goods.

Describe the impact of ignoring risk in capital budgeting decisions.

Differentiate between projects based on variance in cash flows and risk aversion principles.

Understand the concept of a company as a portfolio of projects.

Recognize the application and importance of risk analysis techniques in capital budgeting, including Monte Carlo Simulation.

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Definitions:

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, showing how fixed costs change with output levels.

Average Variable Cost

The total variable cost divided by the number of units produced, reflecting the variable cost of producing each additional unit.

Total Variable Cost Curve

A graph that shows the relationship between total variable cost and the level of a firm’s output.

Factor Prices

The prices of the inputs used in the production process, such as labor, capital, and land.