Author Question: The indifference curves of two investors are plotted against a single budget line. Indifference ... (Read 225 times)

tuffie

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The indifference curves of two investors are plotted against a single budget line. Indifference curve A is shown as tangent to the budget line at a point to the left of indifference curve B's tangency to the same line.
 
  A) Investors A and B will hold the same portfolio.
  B) Investors A and B will have different portfolios of the same standard deviation.
  C) Investors A and B will have different portfolios of the same rate of return.
  D) Investors A and B will have different portfolios but have the same level of risk aversion.
  E) Investor A will expect to earn a lower rate of return than investor B.

Question 2

The optimum level of pollution emissions
 
  A) is zero.
  B) occurs where the marginal external benefit is zero.
  C) occurs where no damage to the environment is being done.
  D) occurs where the marginal external benefit equals the marginal external cost.
  E) occurs where the marginal external cost equals the marginal cost of abatement.



Meganchabluk

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Answer to Question 1

E

Answer to Question 2

E



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