When Making a Choice to Do More of One Activity

question 108

Multiple Choice

When making a choice to do more of one activity, the highest-valued other choice society does not make is called _______ , and it is measured _______ .

• A) opportunity cost; in terms of the money it costs
• B) increasing cost; in terms of the amount of money spent doing so
• C) constant cost; by the slope of the production possibilities curve at that level
• D) opportunity cost; by the slope of the production possibilities curve at that level

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Definitions:

Exercise Price

The cost at which an option's owner is allowed to purchase (for a call option) or offload (for a put option) the underlying asset or commodity.

Time Value

The additional amount that investors are willing to pay for an asset, based on the potential for it to increase in value over time.

At-The-Money

A financial term describing an option whose strike price is identical to the current price of the underlying asset.

Put Option

A financial contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.