Many Canadians living close to the US border regularly cross the border to buy milk, eggs, and other goods at considerably lower prices.
Is this an example of arbitrage?
A)Yes, because shoppers were able to purchase items at lower prices even after deducting their transaction costs.
B)No, "arbitrage" means buying at a low price and reselling at a higher price but no resale takes place here.
C)Yes, arbitrage applies even if no resale takes place; in this case the profits are pocketed by the customers themselves.
D)No, "arbitrage" does not apply to markets that are not in the same geographic area.

Question

Quizplus · Accepted Answer

Arbitrage involves buying and reselling for profit, which is not happening here as the goods are for personal use.

Many Canadians Living Close to the US Border Regularly Cross