Assume we have a stock currently worth $100. We also assume the interest rate is zero, and we can buy options for this stock with a strike price of $100. If the stock can rise or fall by $5 with equal probability over the option period, and the option cannot be exercised until the expiration date, what is the time value of the option?
A. $5
B. $10
C. $0
D. None of the answers is correct.
Answer: D
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Measuring total production by valuing items at their market value allows us to
A) separate the value of different goods with identical prices. B) separate the value of different goods with different prices. C) add together the value of different goods that have different prices. D) add together the value of identical goods that have identical prices. E) ignore the problem that goods and services differ in how long they last.
When Peter's Pizza Company produces 50 pizzas, its average total cost is $8 . The marginal cost of the 51st pizza is $7 . If the firm chooses to produce the 51st pizza, what will happen to average total cost? Explain
What will be an ideal response?
Multiple levels of government are desirable because _____
a. different governmental activities are best undertaken by governments of different sizes b. many governmental activities can only be financed if taxed at multiple levels of government c. multiple levels of government provide sufficient bureaucracy to deal with the complex problems faced by today's governments d. government could not be financed adequately without local governments doing the majority of the work ensuring compliance with the tax system
Which of the following is false about the long run? a. The long-run equilibrium output for a firm in perfect competition occurs at the lowest point on the average total cost curve. b. The shape of the long-run supply curve depends on the extent to which input costs change when there is entry or exit of firms in the industry. c. In a constant-cost industry, the prices of inputs do not change as
output is expanded. d. In an increasing-cost industry, the cost curves of the individual firms rise as the total output of the industry decreases.