What Economic Concept Is Central to Proving That Risk Neutral

question 8

Multiple Choice

What economic concept is central to proving that risk neutral pricing functions in the establishing of option prices?

• A) Consumption possibilities
• B) Factor analysis
• C) Marginal average cost
• D) Declining marginal utility

---

Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that consumers are willing to buy.

Price Ceiling

A government-imposed limit on how high the price of a product or service can be charged in the market, aimed at protecting consumers from high prices.

Quantity Demanded

The amount of a product or service consumers are willing and able to purchase at a given price.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price within a certain time period.