--%>
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 : Corporations account problem I have a

    I have a problem in economics on Corporations account problem. Please help me in the following question. The Corporations account for roughly ______ of U.S. business revenues. (i) 1/4. (ii) 1/2. (iii) 1/6. (iv) 5/6. (e) All the above.

    Q : International demand or supply affected

    Sixty Chinese manufacturers have started producing generic staplers. Since each factory is very small to noticeably influence the international demand or supply for staplers, every firm is: (1) a cartelized seller. (2) a price taker. (3) a primary goo

    		•
  • Q : Influence of subsidy on good Assume

    Assume that the market for a good is initially in equilibrium, and then the govt. places a subsidy on good. The probable result would be: (i) Raised production and purchases of good. (ii) That buyers would pay big prices for the good. (iii) Extended scarcity of the go

    		•
  • Q : Derived Demand Can someone help me in

    Can someone help me in finding out the right answer from the given options. Demands for the productive resources are eventually ‘derived’ from the: (i) marginal utility they directly produce. (ii) Demands for the consumer services and goods. (iii) Disutili

    		•
  • Q : Functional Distribution of Income

    Computing the relative shares of national income accounted for by wages, interest, rent, and profit, yields, respectively measures called the: (1) market distribution of income. (2) functional distribution of income. (3) objective distribution of inco

    		•
  • Q : Problem relating to Changes in Demand

    Airlines considerably decreased the number of flights accessible in the year 2005, as compared to flight availability during the year 2000. Passenger mileage was fall. Economists would be least possible to ascribe the decline in airline ticket sales throughout the ear

    		•
  • Q : Determine least price elastic points

    The section of this supply curve for 2×4s which is least price elastic is in between: (i) point a and point b. (ii) point b and point c. (iii) point c and point d. (iv) point d and point e. (v) point e and point f.

    Q : Total costs from maximizes profit If

    If this firm maximizes its profit as in given graph, then its total costs equal: (w) $75,000 per month. (x) $90,000 per month. (y) $15,000 per month. (z) $105,000 per month.

    Q : Unstable Cartel Agreement Cartel

    Cartel agreements tend to be unstable since: (1) outputs are homogenous. (2) cooperation replaces competition. (3) all governments oppose cartels. (4) members have incentives to cheat. (5) All of the above. Hello g

    		•
  • Q : Purely and monopolistically competitive

    Purely competitive markets and monopolistically competitive markets have in general: (1) the collusive tendencies of large rival firms. (2) extensive negotiations about prices among buyers and sellers. (3) freedom of entry and exit wi

    		•