In the arbitrage equation a profit maximizing firm can choose between __________ and __________.
A)investing in capital;investing in human capital
B)investing new capital;hiring more labor
C)buying new capital;buying a new car
D)putting money in a bank;investing in new capital
E)allocating resource toward production;allocating resources toward inventory

Question

Quizplus · Accepted Answer

The arbitrage equation involves the concept of buying and selling assets simultaneously in different markets. In this context, option D is the best choice as it involves putting money in a bank and investing in new capital, which can yield profits from the interest earned and from the returns generated by the new capital respectively. The other options either do not result in profits or have no direct correlation to the arbitrage equation.

In the Arbitrage Equation a Profit Maximizing Firm Can Choose