Refer to the Accompanying Figure to Answer the Following Questions

question 26

Multiple Choice

Refer to the accompanying figure to answer the following questions.

-A profit-maximizing firm without any price regulations would make ________ in profits.

• A) $1,500
• B) -$720
• C) $720
• D) -$240
• E) $240

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Definitions:

Call Options

Call options are financial contracts that give the buyer the right, but not the obligation, to buy a specified amount of an underlying asset, at a set price, within a specified period.

Put Options

Financial contracts giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time frame.

Stock Price

The current price at which a share of a company is bought or sold on the stock market.

Cost Of Goods Sold

The total cost of materials and labor directly associated with the production of goods sold by a business.