Use the Table for the Question(s) Below

question 85

Multiple Choice

Use the table for the question(s) below.
Consider the following information on options from the CBOE for Merck:
-Assume you want to buy one options contract that with an exercise price closest to being at-the-money and that expires January 2009. The current price that you would have to pay for such a contract is ________.

• A) $680
• B) $380
• C) $650
• D) $420

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Definitions:

Shortage

The insufficiency of a good or service that occurs when the quantity demanded exceeds the quantity supplied; shortages occur when the price is below the equilibrium price.

Price Elasticity of Demand

The rate at which demand for a product responds to its price being altered.

Short Run

The period in economic theory during which at least one factor of production is considered fixed.

Long Run

A period in which all factors of production can be varied, and no inputs are fixed.