Entrepreneurs who earn arbitrage profits are able to do so by extracting the total consumer surplus from buyers.

Question

Quizplus · Accepted Answer

This statement is false. Entrepreneurs who earn arbitrage profits do so by taking advantage of market inefficiencies and price differences between different markets, not by extracting total consumer surplus from buyers. In fact, arbitrage opportunities often arise precisely because there is consumer surplus left over in one market due to price discrepancies or other factors. Entrepreneurs who engage in arbitrage may capture some of this surplus, but they do not necessarily extract it all from buyers.

Entrepreneurs Who Earn Arbitrage Profits Are Able to Do So