In 2005,General Motors Introduced a Blockbuster Promotion by Offering Customers

question 135

Multiple Choice

In 2005,General Motors introduced a blockbuster promotion by offering customers the employee discount prices for any vehicle.Chrysler and Ford followed the trend and offered the same program.This intense price competition among the three major automobile producers resulted in lower profits for all three companies.This outcome illustrates a problem for firms in what type of economic structure?

• A)monopolistic competition
• B)oligopolistic markets
• C)pure monopoly
• D)pure competition

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Definitions:

Exercise Price

The price at which an option holder can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Put Option

A financial agreement that provides the purchaser with the option to sell a certain quantity of an underlying asset at a predetermined price during a set timeframe, without being required to do so.

Exercise Price

The rate at which an individual possessing an option can execute a purchase (in call option scenarios) or a sale (in put option scenarios) of the underlying asset.