USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 24

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Kathy Smith has a margin account with a balance of $60,000. Initial margin requirements are 80 percent, and Jackson Industries is currently selling at $40 per share.
-Refer to Exhibit 3.3. What is Kathy's profit if Jackson's price rises to $50?

• A) $18,750
• B) $15,750
• C) $55,000
• D) $37,750
• E) $28,570

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Definitions:

Domestic Producer Surplus

The difference between what domestic producers are willing to accept for their goods versus what they actually receive, usually measured in the context of international trade.

Import Quota

A governmental limit on the quantity of a particular commodity that can be imported into a country.

Total Surplus

The sum of consumer and producer surplus, representing the overall benefit to society from the trading of goods and services.

Price Elasticities

A calculation that shows the responsiveness of the quantity demanded of a good to its price alterations.