Refer to the Data for a Consumer Whose Income =

question 248

Multiple Choice

Refer to the data for a consumer whose income = $12. Assume new product Z is introduced. How many units of Z will this consumer buy, given his or her $12 budget?

• A)6 units
• B)4 units
• C)2 units
• D)0 units

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Definitions:

Call Option

A financial contract giving the buyer the right, but not the obligation, to buy a stock, bond, commodity, or other assets at a specified price within a specific time frame.

Strike Price

The set price at which an option contract can be bought (call) or sold (put) when it is exercised.

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.

Call Option

A financial contract giving the buyer the right, but not the obligation, to buy a stock, bond, commodity, or other asset or instrument at a specified price within a specific time period.