Escalation Bias Refers to the Situation Where

question 1

Multiple Choice

Escalation bias refers to the situation where

• A) Investors have a propensity to sell winners too soon and hang on to losers too long.
• B) Investors ignore bad news and overemphasize good news.
• C) Investors tend to follow the herd.
• D) Investors put more money into a failure rather than into a success.
• E) Investors are all noise traders.

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Definitions:

Elasticity Supply

An indicator of the extent to which the supply of a product is sensitive to price fluctuations.

Straight-Line Demand

A demand curve that displays a constant relationship between price and quantity demanded, represented graphically as a straight line.

Price Ranges

The spectrum of possible prices at which a good or service can be bought or sold, varying by market conditions, quality, location, and other factors.

Elasticity

A concept that measures the responsiveness of one variable in relation to changes in another variable, often used in economics to describe how changes in price affect supply or demand.