Use the Information for the Question(s) Below

question 8

Multiple Choice

Use the information for the question(s) below.
An exchange traded fund (ETF) is a security that represents a portfolio of individual stocks. Consider an ETF for which each share represents a portfolio of two shares of International Business Machines (IBM) , three shares of Merck (MRK) , and three shares of Citigroup Inc. (C) . Suppose the current market price of each individual stock are shown below:

-The price per share of the ETF in a normal market is closest to:

• A) $168.00
• B) $336.00
• C) $424.50
• D) $504.00

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Definitions:

Perfectly Elastic

A situation in demand or supply where the quantity demanded or supplied changes by an infinite amount in response to any change in price.

More Elastic

Referring to a greater sensitivity of quantity demanded or supplied to changes in price, compared to goods or services with less elasticity.

Demand Elasticity

A measure of how much the demand for a product or service changes in response to changes in its price or other factors.

Elasticity of Demand

The measure of how much the quantity demanded of a good responds to a change in the price of that good.