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On Commodity Exchange a It Is Possible to Buy and Sell

question 67

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On Commodity Exchange A it is possible to buy and sell crude oil at $117 per barrel, while on Commodity Exchange B crude oil can be bought and sold at $119 per barrel. If there are transaction costs of 1% when buying or selling on either exchange, what is the net effect of buying a barrel of oil on Exchange A and selling it on Exchange B?


Definitions:

Canaliculi

Small, channel-like structures in bone tissue that allow for the passage of nutrients and waste materials between blood vessels and osteocytes.

Lamellae

Thin layers or plates, often of bone or tissue, that are structured in a concentric fashion, as in the case of bone lamellae around Haversian canals.

Perforating Canal

Channels within the bone that provide energy and nourishing elements from the periosteum through to the compact bone.

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