Arbitrage

question 160

Multiple Choice

Arbitrage

• A)is the act of buying an item at a low price and reselling the item at a higher price.
• B)is the act of selling an item on consignment and collecting a huge portion of the proceeds to compensate for the seller's time.
• C)is the act of buying an item at a low price, bundling it with another and selling the new package at a much higher price.
• D)is any act of buying and selling that results in the seller earning an above normal profit.

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Definitions:

Anchoring Effect

A cognitive bias where an individual relies too heavily on an initial piece of information (anchor) when making decisions.

Anchoring Effect

A cognitive bias where an individual's decisions or estimates are influenced by an initial piece of information (anchor).

Cognitive Bias

A systematic pattern of deviation from norm or rationality in judgment, where individuals create their own "subjective reality" from their perception.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.