-Christy's Haircuts, the Sole Supplier of Haircuts in a Small

question 456

Multiple Choice

-Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 25th haircut?

• A) zero
• B) $5.00
• C) $17.50
• D) $50.00

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Definitions:

Dynamic Hedging

A strategy that involves periodically adjusting the quantities of instruments used in a portfolio to hedge against risk as market conditions change.

Out-of-the-money

A term used in options trading to describe an option that has no intrinsic value. A call option is out-of-the-money if the stock price is below the strike price, and a put option is out-of-the-money if the stock price is above the strike price.

Intrinsic Value

The intrinsic worth of an asset, determined by the underlying true value encompassing all elements of the business, covering both tangible and intangible factors.

Put Option

A financial contract that gives the buyer the right, but not the obligation, to sell an asset at a specified price within a specific time period.