Suppose you observe a vendor selling peanuts just outside the ballpark for $1.00 a bag.
Inside the ballpark, vendors are selling peanuts for $3.50 a bag. You take orders from
those sitting around you, quoting a price of $2.00 a bag and collecting the money in
advance. You then go out to the street vendor and purchase enough bags for $1.00 to
fulfill the orders and use your ticket stub to re-enter the ballpark. Is this an example of
an arbitrage or is it just a "great bet"?

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The Answer of Suppose you observe a vendor selling peanuts just outside the ballpark for $1.00 a bag.
Inside the ballpark, vendors are selling peanuts for $3.50 a bag. You take orders from
those sitting around you, quoting a price of $2.00 a bag and collecting the money in
advance. You then go out to the street vendor and purchase enough bags for $1.00 to
fulfill the orders and use your ticket stub to re-enter the ballpark. Is this an example of
an arbitrage or is it just a "great bet"?

Suppose You Observe a Vendor Selling Peanuts Just Outside the Ballpark