Unraveling Is an Economic Theory That Describes Which of the Following

question 3

Multiple Choice

Unraveling is an economic theory that describes which of the following?

• A)Low quality products will be quickly discovered and abandoned by buyers
• B)High seller concentration leads to the development of many substitute products
• C)Few sellers improve product quality once they have scale in production
• D)Even low quality sellers will disclose their product quality
• E)Consumers ultimately switch products regardless of quality

---

Definitions:

Profit/Loss

The financial result obtained when revenues exceed expenses (profit) or expenses exceed revenues (loss).

DAX-30 Index Futures

Financial contracts to buy or sell the DAX 30 index at a future date, used for hedging or speculating on the German stock market.

Spot Index

A real-time index that reflects the current prices of the securities included in the index.

Arbitrage Profit

The gain obtained from the simultaneous purchase and sale of the same or equivalent assets or commodities in different markets or in derivative forms.