Refer to the Graph

question 221

Multiple Choice

Refer to the graph. Each labeled point represents a different asset. For which of these assets would we expect arbitrage to cause movement to a different point?

• A) D and F
• B) G and H
• C) D, F, G and H
• D) D, E, and F

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Definitions:

Magnet Pricing

A strategy used by retailers to attract customers by advertising very low prices on a few items with the expectation that once customers are in the store, they will purchase additional items.

Price War

Successive price cutting by competitors to increase or maintain their unit sales or market share.

Market Share

The proportion of total sales in a market captured by a particular brand, product, or company, usually expressed as a percentage of total sales in the industry.

Promotional Allowances

Cash payments or an extra amount of “free goods” awarded sellers in the marketing channel for undertaking certain advertising or selling activities to promote a product.