-Refer to the Above Figure

question 323

Multiple Choice

-Refer to the above figure. At the initial long-run equilibrium, the price level is ________, and at the new long-run equilibrium, the price level will be ________.

• A) 20; 45
• B) 20; 40
• C) 40; 45
• D) 20; 20

---

Definitions:

Time Spread

An options or futures strategy where a trader simultaneously buys and sells the same financial instrument with different expiration dates.

Exercise Price

The specified price at which the holder of an option can buy or sell the underlying asset.

Expiration Date

The date on which an option, future, or derivative contract becomes invalid and the right to exercise it ceases.

European Call Option

A type of call option that can only be exercised at its expiration date, not before, allowing the holder to buy the underlying asset at a predetermined price.