What Is the Meaning of "Short Sell

question 41

Multiple Choice

What is the meaning of "short sell"?

• A)Buy shares from a brokerage firm and enter into a forward transaction to sell the shares at today's price on a future date.
• B)Sell the shares at today's price to an investor and enter into an option agreement to buy the shares back in near future.
• C)Buy shares from one brokerage firm and sell the shares to another brokerage firm with a view to make quick money.
• D)Borrow shares from a brokerage and sell the shares at today's price with the intention to repay the borrowed stock they sold at some future time when the stock is trading for a lower price.

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Definitions:

Perfect Price Discrimination

A pricing strategy where a seller charges the highest price that each consumer is willing to pay, effectively capturing all consumer surplus as profit.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, a measure of producers' benefit.

Marginal Cost

The change in total cost that arises when the quantity produced is incremented by one unit, essentially the cost of producing one additional unit of a good or service.

Total Revenue

The total amount of money a firm receives from the sale of its goods and services, calculated as the price per unit times the number of units sold.