--%>
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 : Uses for break-even analysis Explain

    Explain what are the several uses for break-even analysis?

    		•
  • Q : Relatively inelasticity in supply curve

    At point c, in illustrated figure the supply curve into this graph is: (w) perfectly price elastic. (x) relatively price elastic. (y) unitarily price elastic. (z) relatively inelastic.

    Q : Influence of moderate minimum wage law

    Can someone please help me in finding out the accurate answer from the following question. Even a moderate minimum wage law influences labor markets by causing the unemployment of: (1) Unskilled workers when the labor market is per

    		•
  • Q : Highest income in supply Glynn s weekly

    Glynn s weekly income would be the highest at: (1) point a. (2) point b. (3) point c. (3) point d. (4) point e. 1621_Labor-Leisure Trade-off</span></p> </div> <!-- /comment-box --> </li> </td> </tr><tr> <td> <li> <div class=

    Q : Elasticity and Revenue At the point of

    At the point of unit elasticity beside the demand curve then a firm faces: (w) profits are always maximized. (x) total revenue is certainly at a maximum. (y) total costs are minimized. (z) All of the above. I need

    		•
  • Q : Determine linear demand curve-elasticity

    Beside a negatively sloped, that has straight-line demand curve, there one constant is: (w) price. (x) quantity demanded. (y) slope. (z) the price elasticity of demand. Please guys help to solve this problem of

  • Q : Law of Diminishing Merginal utility Law

    Law of Diminishing Merginal utility: This states that as consumer consumes more and more units of commodity, the utility derived from each and every successive unit goes on decreasing. According to this law TU increases at decreasing rate and the MU d

    		•
  • Q : Shutdown level of output for a purely

    For a purely competitive firm the shutdown level of output arises where is: (w) total revenue barely covers total fixed costs. (x) market price just equals the minimum of its AVC curve. (y) total revenue equals total cost as (PQ = TFC + TVC). (z) pric

    		•
  • Q : Short-run equilibrium and long run

    When a purely competitive industry is within equilibrium as well as all firms in the industry are operating along with economies of scale, in that case the industry is in: (w) long-run and short-run equilibrium. (x) short-run equilibrium and long run

    		•
  • Q : Supply curve for perishable goods The

    The supply curve for perishable goods which, once produced, can’t be stored in inventory is generally functioned as perfectly price inelastic into the: (i) short-run. (ii) intermediate period. (iii) long-run. (iv) market period. (v) fiscal year

    		•