Use the Figure Below to Answer the Following Questions

question 14

Multiple Choice

Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.

-Refer to Table 2.4.1. Which one of the following is true?

• A)The opportunity cost of producing more of good X is the same for both planets.
• B)The opportunity cost of producing more of good Y is the same for both planets.
• C)The opportunity cost of producing more of good X is lower in Vulcan.
• D)The opportunity cost of producing more of good Y is lower in Vulcan.
• E)Vulcans are smarter than Romulans.

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Definitions:

Put Option

A financial agreement granting the holder the option, but no requirement, to sell a certain quantity of an underlying asset at a predetermined price during a defined period.

Forward Contract

An individualized agreement for the purchase or sale of an asset at an agreed-upon price on a specific future date between two parties.

Swap Contract

Swap Contract is a financial agreement to exchange cash flows or other financial instruments between two parties at specified future dates.

Interest Rate Floor

A derivative contract that provides a minimum interest rate protection to investors, ensuring rates do not fall below a specified level.