Sarah's demand curve for shoes has the same slope as Pete's; however, it lies to the right of Pete's. An increase in the price of shoes will cause
A) Sarah to incur a greater loss of consumer surplus than Pete will.
B) Pete to incur a greater loss of consumer surplus than Sarah will.
C) Sarah and Pete to incur the same loss of consumer surplus.
D) Sarah's demand curve to shift closer to Pete's.
A
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Both buyers and sellers are price takers in a perfectly competitive market because
A) each buyer and seller is too small relative to others to independently affect the market price. B) both buyers and sellers in a perfectly competitive market are concerned for the welfare of others. C) the price is determined by government intervention and dictated to buyers and sellers. D) each buyer and seller knows it is illegal to conspire to affect price.
As an option nears its expiration date, the size of the premium approaches
A) zero. B) infinity. C) its intrinsic value. D) an amount which varies, depending on prevailing market interest rates on the expiration date.