You Find That the Bid and Ask Prices for a Stock

question 85

Multiple Choice

You find that the bid and ask prices for a stock are $10.25 and $10.30, respectively. If you purchase or sell the stock, you must pay a flat commission of $25. If you buy 100 shares of the stock and immediately sell them, what is your total implied and actual transaction cost in dollars?

• A) $50
• B) $25
• C) $30
• D) $55

Understand how to apply demand and supply functions to determine market equilibria.

Analyze the effects of taxes on market equilibrium, including the impact on quantities supplied and demanded.

Assess the impact of taxes on the equilibrium price paid by consumers and received by producers.

Understand the concept of elasticity and how it affects market outcomes.

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Definitions:

Validity

Refers to the extent to which a concept, conclusion, or measurement is well-founded and likely corresponds accurately to the real world.

Reliability

A measure of the consistency or repeatability of test scores or measurements over time.

Measures

Quantitative indicators or tools used to assess, count, or describe a phenomenon.

Supposed

Assumed or believed to be the case based on evidence or reasonable grounds.