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

Question

Quizplus · Accepted Answer

The fact that a used XBOX 360 sells for $100 and a new XBOX 360 sells for $300 does not necessarily indicate an arbitrage opportunity. Arbitrage opportunities arise when identical assets trade at different prices, and a profit can be made by buying the asset at the lower price and selling it at the higher price. In this case, the market for a used XBOX 360 is not the same as the market for a new XBOX 360, so the prices are not directly comparable. Additionally, the market for a used XBOX 360 may be less certain or less liquid than the market for a new XBOX 360, which would affect the availability and pricing of the assets.

You See on Craigslist That a Used XBOX 360 Sells