Question

If big macs were a durable good that could be costlessly transported between countries, which of the following would present an arbitrage opportunity? check all that apply.

Answer 1

Arbitrage opportunities exist where a decent can be purchased in one nation at a low cost and sold in another at a higher cost. Since Big Macs are less expensive in the United States than in Brazil, this would present such an opportunity.In reality, PPP is not anticipated that would apply superbly to merchandise, for example, burgers, given that individuals don't purchase Big Macs in one nation and offer them in another.

Answer 2

Answer:

The correct answer is "Exporting Big Macs from the Eurozone to the United States "

Explanation:

I had to look into the options of the problem:

1). Exporting Big Macs from Norway to China

2). Exporting Big Macs from the Eurozone to the United States

3). Exporting Big Macs from Poland to China

If Big Macs were a durable good, with the characteristic of being transported free of charge between countries, an opportunity for arbitration would be the export of Big Macs from the Eurozone to the United States. This is because the value of this good in the Eurozone is lower than in the United States, which is why it is convenient to export it.

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