-If 2003 Is the Reference Base Period, What Is the |

question 71

Multiple Choice

$$\begin{array} { | l | l | l | l | } \hline & \begin{array} { l } \text { CPI basket } \\\text { quantity }\end{array} & 2003 \text { price } & 2011 \text { price } \\\hline \text { DVDs } & 10 \text { discs } & \$ 16 \text { per disc } & \$ 12 \text { per dis } \\\hline \begin{array} { l } \text { Bottled } \\\text { water }\end{array} & 200 \text { bottles } & \$ 1.00 \text { per bottle } & \$ 1.25 \text { per bottle } \\\hline\end{array}$$
-If 2003 is the reference base period, what is the price index for the CPI basket of goods for 2011 in the above table?

• A) 102.8
• B) 128.0
• C) 97.3
• D) zero because the price of CDs fell and the price of water increased

Understand the factors that influence the value of call options.

Recognize the relationship between call option value and underlying stock price movements.

Identify the components of the Black-Scholes Option Pricing Model for calls.

Understand the distinction between intrinsic value and market price of call options.

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Definitions:

Market Economy

An economy in which decisions about production and consumption are made by individual producers and consumers.

Public Goods

Items that cannot be restricted to non-payers and whose consumption by one individual does not diminish availability to others; these are accessible to all, regardless of payment.

Positive Externalities

External benefits.

Common Resource

A type of good that is non-excludable but rivalrous, meaning it is available to everyone but its consumption by one person can limit availability to others.