If a firm is unable to keep its national markets separate,individuals or businesses may undercut its attempt at price discrimination by engaging in _____.
A) speculation
B) arbitrage
C) dumping
D) countertrade
E) forecasting

Question

Quizplus · Accepted Answer

Arbitrage refers to the practice of taking advantage of a price difference between two markets by buying low in one market and selling high in the other market. If a firm is unable to keep its national markets separate and prevent arbitrage, individuals or businesses may engage in this practice and undercut the firm's attempt at price discrimination. Speculation refers to taking a financial risk in the hope of making a profit, dumping refers to selling goods at prices lower than their production costs, countertrade refers to a type of international trade where goods or services are exchanged instead of using currency, and forecasting means predicting future events.

If a Firm Is Unable to Keep Its National Markets