A call option has a strike price of $48. If the underlying stock is selling for $45 on the expiration date, the intrinsic value of the call option is __________ per share
A) $93
B) $45
C) $3
D) $0
D
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"According to the Coase theorem, if Gabriel wants the local television station to cease having helicopters fly over his house at night, he will be more likely to be able to reach an agreement with the station if the property right to the airspace is
clearly defined and the transaction costs of negotiating are high." Is this statement true or false? Explain your answer.
For many years the United States was able to retain a system for drafting young men into the armed forces because
A) the public feared the menace of Communism. B) patriotism had declined and so volunteers were not available. C) young men were not willing to risk their lives. D) many people adversely affected found it more to their advantage to use some personal escape route than to attack the system directly.
Suppose a seller's opportunity cost matches a buyer's valuation of the product. Assuming a two-person economy, which of the following statements will be true?
a. The transaction will benefit the buyer, while the seller will neither gain nor lose from it. b. The economic value created by this exchange will be zero. c. Both parties will be worse-off after the transaction. d. The seller will be worse-off than the buyer after the transaction.
If Stimpson University increases tuition in order to increase its revenue, it will
a. not be successful if the demand curve slopes downward b. be successful if demand is elastic c. be successful if demand is inelastic d. be successful if supply is elastic e. be successful if supply is inelastic