QUESTION 4

Buying a diversified mutual stock fund allows you to

1. completely avoid all types of risk.
2. avoid only systematic risk.
3. avoid only random, unsystematic risk.
4. avoid risk only when all the stock prices are perfectly correlated.

QUESTION 5

Assume the following. In location A yearly temperatures range from -30F to 100F and in location B yearly temperatures range from 55F to 75F. In both locations the average yearly temperature equals 65F. We can conclude that

1. temperature in location A has a higher variance.
2. temperature in location B has a higher standard deviation.
3. temperature in location A has a lower standard deviation.
4. temperatures in both locations have the same standard deviation but different variances.

QUESTION 9

In the long run, a fall in the input price causes less of an increase in factor demand

1. if the market price remain constant.
2. if the market price will decrease too.
3. if the increase of product supply affected price.
4. if the factor demand is more elastic.

QUESTION 10

Suppose the principal offers to share a percentage of the profit with the agent. Such a contract

1. would not be acceptable to any agent.
2. creates a production inefficiency.
3. is incentive compatible.
4. will yield the same income for the agent as a hire contract would.

QUESTION 11

In the short run, which one of the following causes a competitive firm to hire more labor?

1. an increase in wage rate
2. decrease in the output price
3. an increase in the output pric
4. ea specific tax imposed on the firm's output

QUESTION 13

For a monopoly, the value of the next worker equals

1. MPL.
2. p MPL.
3. MR MPL.
4. w/MPL.