Use the Following to Answer Questions

question 1

Multiple Choice

Use the following to answer questions :
Figure 3-3
-Assume that automotive workers strike and the technological improvements occur at the same time.If initial market conditions were reflected by the structure of Figure 3-3, which of the following must occur?

• A)Lower prices.
• B)Less quantity.
• C)More quantity.
• D)Higher prices.
• E)Cannot be determined from the given information.

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Definitions:

Intrinsic Value

The perceived or calculated true value of an asset, investment, or company based on fundamental analysis without regard to its market value.

Strike Price

The fixed price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Intrinsic Value

The true, inherent, and underlying value of an asset, based on underlying perceptions of its true value including all aspects of the business, in terms of both tangible and intangible factors.

Underlying Stock Price

The current market price of the stock that is the subject of a call or put option.