Resources Are Allocated Efficiently When

question 129

Multiple Choice

Resources are allocated efficiently when

• A)the exchange value of the resources to demanders is greater than the opportunity cost of the resources.
• B)the marginal benefit to demanders of the resources in the goods they purchase is less than the marginal cost to suppliers of the resources they use in producing the goods.
• C)firms produce the quantity of output at which price is equal to marginal cost.
• D)firms produce the quantity of output at which price is greater than marginal cost.

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Definitions:

American Call Option

A type of options contract that gives the holder the right, but not the obligation, to buy a specified asset at a specified price on or before a specified date.

Risk-Free Interest Rate

The rate of return on an investment with no risk of financial loss, typically represented by the yield on government securities.

Exercise Price

The price at which an option holder can buy (call) or sell (put) the underlying asset.

Zero Coupon Bond

A type of bond that does not pay periodic interest payments and is instead issued at a discount to its face value, which is the amount paid to the holder at maturity.