One Reason That National Defence Is a Classic Example of a Public

question 57

Multiple Choice

One reason that national defence is a classic example of a public good is that

• A)all citizens want national defence.
• B)society deems it to be too important to be provided by the private sector.
• C)the benefits of national defence cannot be kept from those who do not pay.
• D)military technology is too expensive for private firms to provide.
• E)it would be immoral for private firms to provide this essential commodity.

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Definitions:

Option's Value

The intrinsic and extrinsic value of an options contract, which determines its worth at a given point in time.

Black-Scholes Option Pricing Model

A mathematical model used to estimate the price of European-style options, incorporating factors such as volatility and time to expiration.

Continuous Compounding

The mathematical limit reached when an investment's interest is calculated and added back to the principal at an infinite number of intervals.

Put-Call Parity

A principle in options pricing that defines the relationship between the price of European put and call options with the same strike price and expiration.