In which of the following conditions does arbitrage occur?
A) When a firm offers a product at low prices through discount coupons and promotions
B) When a firm sells a product at higher prices to make a profit from relatively fewer sales
C) When a firm imports products from a manufacturer and distributes it directly through retail outlets
D) When a firm purchases products in a country where prices are lower and resells it in a country where prices are higher
E) When a firm prices its products at the least cost, risking losses, in order to grab market share

Question

Quizplus · Accepted Answer

Arbitrage usually occurs in situations where there are price discrepancies between different markets, and it involves taking advantage of those discrepancies to make a profit. Option A and E are related to pricing strategies, but not necessarily arbitrage. Option B describes a high-price, low-volume strategy, which is not arbitrage. Option C describes direct distribution, which does not involve price differences.

In Which of the Following Conditions Does Arbitrage Occur