Arbitrage will occur:
A) when a person can buy the good at one price and then resell it at a higher price.
B) when the monopolist wants to employ it to increase profits.
C) when the monopolist is able to practise price discrimination.
D) when the monopolist faces a downward-sloping demand curve.

Question

Quizplus · Accepted Answer

Arbitrage is the act of buying a good at a lower price and then selling it at a higher price in a different market. This can occur when there are price differences between markets, and individuals or businesses can take advantage of these differences to make a profit. Therefore, option A is the only choice that correctly explains the concept of arbitrage. The other options are not related to arbitrage.

Arbitrage Will Occur