The greater the value differences between disconnected markets, the greater the profit potential arising from arbitrage. However, greater distance also tends to be accompanied by greater ________ and risks.

Question

Quizplus · Accepted Answer

Entry costs refer to the expenses incurred in entering a new market. As mentioned in the statement, greater distance between disconnected markets leads to higher entry costs and risks associated with entering those markets. Therefore, option C is the best choice. The other options, such as human resources costs and R&D costs, are not directly related to the concept of disconnected markets and arbitrage opportunities. Exit costs, on the other hand, refer to the expenses incurred when leaving a market, which may be relevant but are not mentioned in the statement.

The Greater the Value Differences Between Disconnected Markets, the Greater