Question

"After a severe hurricane in South Carolina, the price of electric generators quadrupled. People living outside of South Carolina purchased electric generators in their home states and drove them to South Carolin a to sell at a much higher price. What is this an example of"

Answer 1

Answer:

Arbitrage

Explanation:

Arbitrage occurs when the same good sells for different prices at different market. This price difference allows market participants to earn riskless profit .

In this case, the generator is more expensive in South Carolina when compared with other places. Thus, in order to earn riskless profit, people would buy where it is cheaper and sell at South Carolina where it is more expensive.

Economic theory suggest that if this kind of buying continues, soon the prices would be the same in both markets .

I hope my answer helps you

Answer 2

Answer:

Arbitrage

Explanation:

Arbitrage is the act of buying and selling in order to make profit, this is done by differences of pricing in the different markets. Meaning that if goods are bought in one location and you carry it to another location to sell at a higher price. In the case of this question because of the hurricane the price of electric generators quadrupled because people buy outside South Carolina purchased and went to South Carolina to sell for a much higher price