In the Following Figure, the First Panel Shows a Market

question 31

Multiple Choice

In the following figure, the first panel shows a market situation prior to regulation and the second panel shows the effects of regulation.Figure 14.2
In the figure,
D: Demand curve for automobiles
S₁: Supply curve of automobiles prior to regulation
S₂: Supply curve of automobiles after regulation
FG: Clean up cost per unit
-Although the GATT was supported by most of the countries of the world, yet global trade shrank during the close of the last decade. This was due to:

• A)growing suspicion among the nations of the world.
• B)hyperinflation in the major economies of the world.
• C)the recession which began in 2007.
• D)political turmoil in the Asian countries.
• E)the desire among the major players to dominate the international market.

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Definitions:

Payoff Profile

A plot showing the gains and losses that will occur on a contract as the result of unexpected price changes.

Forward Contract

A customized contract between two parties to buy or sell an asset at a specified price on a future date.

Option Contract

An option contract is a financial derivative that confers the right, but not the obligation, to buy or sell an asset at a set price on or before a certain date.

Forward Contract

A customizable financial contract between two parties to buy or sell an asset at a specified price on a future date.