--%>
Assignment Help - homework help

Chance for arbitrage

Assume the price of unleaded regular octane gasoline were 20 cents per gallon higher in New Jersey than in Oklahoma.  Do you think there would be chance for arbitrage (that means. that firms could buy gas in Oklahoma and then sell it at profit in New Jersey)?  Why or why not?

Oklahoma and New Jersey stand for separate geographic markets for gasoline due to high transportation costs.  If transportation costs were zero, a price raise in New Jersey would prompt arbitrageurs to buy gasoline in Oklahoma and sell it in New Jersey.  In this case it is unlikely that the 20 cents per gallon difference in costs would be high sufficient to create a profitable opportunity for arbitrage, given both transactions costs & transportation costs.

   Related Questions in Microeconomics

  • Q : Buying and selling cost in monetary

    Additionally to monetary prices, there the costs of buying and selling comprise: (w) wage payments. (x) monopoly profits. (y) transaction costs. (z) social benefits. How can I solve my economics pr

    		•
  • Q : Determine highest incomes at specific

    Salespeople as illustrated in graph who earn percentage commissions upon the total revenue from DVD games would create their highest incomes at specific price of: (w) $50. (x) $25. (y) $10. (z) zero.

    Q : Most efficient technology at the lowest

    When all goods are produced in highly competitive markets as well as there are no externalities, goods tend to be manufactured: (i) relatively inefficiently. (ii) along with the most efficient technology at the lowest price. (iii) along with maximum p

    		•
  • Q : Problem on Horizontal Integration I

    I have a problem in economics on Horizontal Integration. Please help me in the following question. McDonalds makes hamburgers at a number of various locations. This is an illustration of a: (i) Horizontally integrated firm. (ii) Monopoly. (iii) Vertic

    		•
  • Q : Distribution and production for social

    Society as entire benefits most when the distribution and production of penicillin corresponds to: (a) point a. (b) point b. (c) point f. (d) point d. (e) point g.

    Q : Illustration of transaction costs You

    You are more probable to shop at a remote farmers’ market quite than buy apples at a local grocery store while: (w) possible, since produce is cheaper at the farmers’ market. (x) you would like to buy only vegetables and fruits. (y) the opportunity costs o

    		•
  • Q : Strategic barriers to entry Extensive

    Extensive national advertising can be a form of: (1) natural barrier. (2) strategic barrier. (3) regulatory barrier. (4) price discrimination. (5) moral hazard. Can anybody suggest me the proper explanation for given problem regard

    		•
  • Q : Perfectly demand elasticity On a

    On a horizontal demand curve, there: (w) demand is perfectly elastic. (x) demand is perfectly inelastic. (y) the elasticity of demand varies. (z) demand is unitarily elastic. Can someone explain/help me with best s

    		•
  • Q : Analytic time in the market period In

    In the market period: (w) price is constant. (x) output is constant. (y) supply is horizontal. (z) supply is completely elastic. Please guys help to solve this problem of Economics with some explan

    		•
  • Q : Constant cost industry with no barriers

    When consumers eventually cannot distinguish one roasted chicken dinner from other, while roasted chicken dinners are produced into a constant cost industry, and when no barriers to entry or exit exist, so this firm’s lo

    		•