You see on eBay that a used Xbox 360 sells for $100 and a new Xbox 360 sells for $300. Is this an arbitrage opportunity?
A)Yes, because the market for a used Xbox 360 is not the same as the market for a new Xbox 360.
B)No, because the market for a used Xbox 360 is not the same as the market for a new Xbox 360.
C)No, because the market for a used Xbox 360 is a competitive market.
D)Yes, because the market for a used Xbox 360 is a competitive market.

Question

Quizplus · Accepted Answer

Arbitrage involves taking advantage of price differences for the same item in different markets. Since a used Xbox 360 and a new Xbox 360 are not the same item (due to their condition), there's no arbitrage opportunity based on the condition difference alone.

You See on EBay That a Used Xbox 360 Sells