The Payoffs from Investing in an Option Contract Are Designed

question 97

Multiple Choice

The payoffs from investing in an option contract are designed so that:

• A) both the buyer and the seller of the contract will profit.
• B) the seller's (buyer's) gain is the buyer's (seller's) loss.
• C) roughly 20% of sellers and 50% of buyers profit.
• D) there are no profits but there are also no losses.

Understand the role of reinforcement in the law of effect and behavior repetition.

Understand the principles of operant learning, including reinforcement and punishment.

Distinguish between different schedules of partial reinforcement and their effects on behavior.

Apply the concepts of learning theory to critique and suggest improvements for real-world systems such as the prison system.

---

Definitions:

Total Costs

The sum of all expenses incurred in the production of goods or services, including fixed and variable costs.

Total Revenue

The overall income generated by a firm from its sales activities before any costs or expenses are subtracted.

Normal Return

The minimum profit necessary for a company to remain in business, often equated to covering opportunity costs.

Total Fixed Costs

The sum of all costs required to produce any output, assuming they remain constant regardless of the level of production.