Assuming zero transaction cost, if your local grocer buys oranges at a low price from an orchard and resells them to you at a higher price, then the grocer's revenue minus costs is known as
A) arbitrage profits.
B) transactions profits.
C) pure profits.
D) excess profits.

Question

Quizplus · Accepted Answer

Arbitrage profits are the profits made by buying and selling the same asset in different markets at different prices. In this case, the grocer is buying oranges from an orchard at a low price and reselling them to you at a higher price. The difference between the two prices is the grocer's arbitrage profit.

Assuming Zero Transaction Cost, If Your Local Grocer Buys Oranges