Related to the Economics in Practice on Page 28: Which

question 30

Multiple Choice

Related to the Economics in Practice on page 28: Which one of the following occurs when an individual enters the paid work force?

• A) The opportunity cost of time for housework increases, because time spent on housework could be spent on money-earning activities.
• B) The opportunity cost of time for housework increases, because money earned at a job can allow individuals to pay someone to do household chores that the individuals used to do themselves.
• C) The opportunity cost of time for housework decreases, because increased earning power makes individuals less likely to do their own housework.
• D) The opportunity cost of time for housework decreases, because as more people enter the work force, businesses have greater incentives to develop innovations that make housework more efficient.

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Definitions:

Market Risk

The risk of losses in investments caused by factors affecting the overall performance of financial markets.

Number of Assets

The total quantity of different types of financial assets, such as stocks, bonds, and real estate, owned by an individual or entity.

Portfolio

A group of individual assets held in combination. An asset that would be relatively risky if held in isolation may have little, or even no risk, if held in a well-diversified portfolio.

Beta

A measure of a stock's volatility in relation to the overall market, used in the capital asset pricing model to determine expected return.