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

Question

Quizplus · Accepted Answer

Arbitrage profit refers to the profit gained by buying a product or service at a lower price in one market and selling it at a higher price in another market. While entrepreneurs may be able to capture some of the consumer surplus, they are not able to extract the total consumer surplus as buyers have different preferences and values for the product or service. Therefore, not all buyers are willing to pay the same price, and some will still get some surplus even if the price is raised.

Entrepreneurs Who Earn Arbitrage Profit Are Able to Do So