From the Concept of an "Efficient Frontier," the Point on a Frontier

question 55

Multiple Choice

From the concept of an "efficient frontier," the point on a frontier that is optimal for all firms:

• A) is the top point.
• B) is the point closest to the vertical axis.
• C) is the point half way between the two end points.
• D) cannot be determined since firms vary in their willingness to accept risk.

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Definitions:

Investment

In economics, spending for the production and accumulation of capital and additions to inventories.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, representing how much of an asset's value has been used up over time.

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given budget at set prices.

Absolute Value

The distance of a number from zero on the number line, without considering direction.