Figure: Budget Lines for Oranges and Apples

question 90

Essay

Figure: Budget Lines for Oranges and Apples
(Figure: Budget Lines for Oranges and Apples) Look at the figures Budget Lines for Oranges and Apples.For some time, Antonio has $5 per month to spend on oranges and apples.The price of an orange is $0.50 and the price of an apple is $0.25.Which of the charts shows what will happen to his budget line if the price of an apple rises to $0.50?
A.Chart A
B.Chart B
C.Chart C
D.Chart D

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Definitions:

Basis

In finance, refers to the difference between the spot price of an asset and its future price, or to the initial value used for tax purposes.

Futures Price

The agreed-upon price for the purchase or sale of an asset at a future date in a futures contract.

Spot Price

The current market price at which an asset, such as securities, commodities, or currencies, can be bought or sold for immediate delivery.

Basis Risk

The possibility that a futures contract's price won't align with the movements of the underlying asset's price, resulting in potential financial losses during hedging activities.