Use the Figure for the Question(s)below

question 57

Multiple Choice

Use the figure for the question(s) below.
-This graph depicts the payoffs of:

• A)a long position in a put option at expiration.
• B)a short position in a call option at expiration.
• C)a short position in a put option at expiration.
• D)a long position in a call option at expiration.

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Definitions:

Inefficiency

The lack of optimal use of resources, resulting in lost potential output or increased costs.

Monopoly Pricing

Pricing strategies employed by a monopoly, where a single firm controls the entire market for a good or service and can influence prices.

Deadweight Loss

Economic inefficiency resulting when the market equilibrium for a good or a service is not achieved.

Social Cost

The total cost to society, including both private costs and any external costs, from producing or consuming a good or service.