Risk is typically measured:
a. by comparing the size of a firm to other firms operating in the market.
b. by looking at the economic profit that a firm has earned in the past few years.
c. by determining whether the bonds issued by a firm are of high or low value.
d. by comparing how much the stock price fluctuates compared with an average firm.
e. by comparing how much the price of the bond falls whenever the price of a firm's product rises.
d
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"My son is a smart entrepreneur. Rather than borrow money from others, he used his own savings to start his music business, and thereby avoided paying interest on loans." An economist would respond by saying
A) "both you and your son are complete idiots." B) "it's always good to avoid borrowing and paying interest." C) "nobody can avoid paying interest, not even your clever son." D) "your son might have avoided paying interest, but he also avoided earning interest."
Comparative advantage is the ability, compared with another producer
A) to produce more of a product with the same resources. B) to use fewer inputs to produce the same amount of a product. C) to produce a higher-quality product with fewer resources. D) to produce an additional unit of a product at lower opportunity cost.