An Agreement That Gives the Owner the Right, but Not

question 241

Multiple Choice

An agreement that gives the owner the right, but not the obligation, to buy or sell a specific asset at a specific price for a set period of time is called a(n) _______________ contract.

• A) Option.
• B) Forward.
• C) Futures.
• D) Swap.
• E) Spot.

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Definitions:

Shut Down

In economics, shut down refers to a short-term decision by a firm to cease production because operating costs exceed the revenue generated, particularly when prices fall below variable costs.

Increasing-Cost Industry

An industry in which costs of production increase as output is increased, often due to factors like limited resources or higher input prices.

LRAC Curve

Stands for Long-Run Average Cost curve, which shows the lowest average cost of producing different levels of output when all inputs, including capital, are variable.

Entry

The act of beginning or entering into a particular sphere or market, often used in the context of firms entering an industry.