The -Shape of the Long-Run Average Total Cost Curve

question 113

Multiple Choice

The -shape of the long-run average total cost curve is primarily due to:

• A)technological change.
• B)economies and diseconomies of scale.
• C)fixed costs.
• D)diminishing returns.

---

Definitions:

Strike Price

The fixed price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.

Call Pays

Call pays refers to the financial transactions or payments made when the issuer exercises a call option on a bond, paying off the principal and any accrued interest before the maturity date.

Protective Put

An investment strategy that involves buying put options on stocks that are already owned to hedge against potential declines in the value of those stocks.

Downside Risk

Refers to the potential loss in value of an investment or asset if the market conditions deteriorate.