Use the Table for the Question(s) Below

question 24

Multiple Choice

Use the table for the question(s) below.
Consider the following information on options from the CBOE for Merck:
-How many of the January 2009 call options are in-the-money?

• A) 1
• B) 2
• C) 3
• D) 4

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Definitions:

Homothetic Preferences

Preferences where if a consumer prefers a bundle of goods A to B, they will also prefer a scaled-up version of A to the same scale-up of B, maintaining the same proportions.

Marginal Rate of Substitution

How quickly a consumer agrees to trade one good for another, aiming to keep their level of pleasure steady.

Edgeworth Box

A diagram used in economics to show the distribution of resources, illustrating how different mixes of goods can lead to an optimal allocation.

Competitive Equilibrium

A state in a competitive market where supply equals demand, and the market clears at a price where no participant has an incentive to change their behavior.