Exhibit 4-10 Supply and Demand Data for Apricots

question 25

Multiple Choice

Exhibit 4-10 Supply and demand data for apricots

• A) There would be a shortage of apricots.
• B) Buyers would not purchase all of the apricots that are grown.
• C) Buyers would purchase more apricots than are currently being supplied.
• D) Farmers would reduce the number of acres allocated to the growing of apricots.

Bushels demanded per month	Price per bushel	Bushels supplied per month
50	$5	80
55	4	75
60	3	70
65	2	65
70	1	55

Which of the following would occur if the government sets a price floor of $4 in the market shown in Exhibit 4-10?

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Definitions:

Put Contract

A financial agreement that grants the holder permission, but not the requirement, to sell a certain amount of an underlying asset at a predetermined price before a certain deadline.

Call Premium

The additional cost over the par value that an investor must pay to purchase a callable security before its maturity date.

Strike Price

The predetermined price at which the holder of an option can buy (call) or sell (put) the underlying asset, until the option expires.

Call Contract

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