Which of the following statements is TRUE regarding arbitrage?
A) It is easier to prevent arbitrage for some products than for others.
B) The U.S. Constitution prevents the government from engaging in arbitrage prevention.
C) Arbitrage may increase the profits for firms, depending on the elasticity of demand in the market.
D) Firms will still be able to price discriminate across markets even when arbitrage is present.

Question

Quizplus · Accepted Answer

Arbitrage is the act of buying and selling the same asset in different markets to take advantage of price differences. It is easier to prevent arbitrage for some products than for others, depending on factors such as transportation costs, regulations, and market conditions. For example, it may be easier to prevent arbitrage for perishable goods or products with high transaction costs, such as real estate.

Which of the Following Statements Is TRUE Regarding Arbitrage