Graph 6-10 -In Graph 6-10, the Per-Unit Burden of the Tax on of the Tax

question 20

Multiple Choice

Graph 6-10

-In Graph 6-10, the per-unit burden of the tax on buyers is:

• A) P₂ minus P₀
• B) P₂ minus P₁
• C) P₁ minus P₀
• D) Q₁ minus Q₀

---

Definitions:

Underlying Asset

An asset over which options or other derivative instruments are based, which can include stocks, bonds, commodities, or currencies.

Exercise Price

The price at which the holder of an option can buy or sell the underlying security, as specified in the option contract.

Uncovered Put

A type of options strategy where the seller (or writer) of a put option does not hold a short position in the underlying stock, leading to higher risk if the option is exercised.

Uncovered Call

An uncovered call is an options strategy where the seller sells call options without owning the underlying securities, exposing the seller to unlimited risk.