You own a European put option with 1 month to expiration and with strike price 50, the stock is currently trading at 45, and the
1 answer:
You might be interested in
Answer:
D) All of the above are correct.
- a. is an example of a price ceiling.
- b. leads to a larger shortage of apartments in the long run than in the short run.
- c. leads to lower rents and, in the long run, to lower-quality housing.
Explanation:
A price ceiling will always result in economic deficiencies and deadweight loss. The quantity supplied will decrease since the price set is below the equilibrium price, and the quantity demanded will increase due to the same reason. A shortage of products or services results from price ceilings.
The deadweight loss results from the loss of economic efficiency and is represented by the area below the demand curve and above the supply curve, which is left of the equilibrium price. In the long run, the total quantity of units available will lower and the quality of the units will also lower.
