Factor Markets Are Different from Product Markets in an Important

question 16

Multiple Choice

Factor markets are different from product markets in an important way, because:

• A) factor markets are fraught with disequilibrium
• B) the factor supply function is likely to be downward-sloping
• C) factor demand is a derived demand
• D) factor demand is likely to be upward-sloping

---

Definitions:

Underlying Stock Price

The prevailing market value of the stock that a derivative contract, like an option, relies on.

February 20 Put

A put option that gives the holder the right to sell the underlying asset at a predetermined price on or before February 20.

Put Increases

An erroneous or unclear term; possibly refers to the increase in value of a put option as the underlying asset's price decreases.

Underlying Stock

The basic security that one has the right to buy or sell under the terms of an option contract or other derivative agreement.