An Option Contract Is Created When an Offeror Promises to Hold

question 21

True/False

An option contract is created when an offeror promises to hold an offer open for a specified period of time in return for a payment given by the offeree.

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Definitions:

Constant-cost Industry

An industry where the costs of production, including inputs and technology, do not change as the total output of the industry changes.

Long-run Equilibrium

A state in which all aspects of an economy or market are balanced, and all adjustment processes have been completed over time.

Consumer Demand

The desire and ability of consumers to purchase goods and services at given prices within a specific time period.

Competitive Increasing-cost Industry

An industry in which the entry of new firms causes the prices of inputs to increase, affecting the cost of production for all firms.