Suppose That a Tariff Is Imposed on Imported Cheese

question 31

Multiple Choice

Suppose that a tariff is imposed on imported cheese.This will have the effect of __________ the price of cheese,__________ consumers' surplus,and __________ producers' surplus.

• A) increasing; increasing; increasing
• B) decreasing; decreasing; decreasing
• C) increasing; increasing; decreasing
• D) increasing; decreasing; increasing
• E) decreasing; decreasing; increasing

Understand the factors affecting option pricing, including underlying stock price movements and strike prices.

Apply the risk-free rate of return in option valuation.

Analyze the payoff from different options strategies, including writing calls and puts.

Calculate the profit or loss from executing options contracts.