You See on EBay That a Used Xbox 360 Sells

question 66

Multiple Choice

You see on eBay that a used Xbox 360 sells for $100 and a new Xbox 360 sells for $300. Is this an arbitrage opportunity?

• A)Yes, because the market for a used Xbox 360 is not the same as the market for a new Xbox 360.
• B)No, because the market for a used Xbox 360 is not the same as the market for a new Xbox 360.
• C)No, because the market for a used Xbox 360 is a competitive market.
• D)Yes, because the market for a used Xbox 360 is a competitive market.

---

Definitions:

Long-Run Equilibrium

A state in which all factors of production and costs are variable, and firms make normal profits in a competitive market.

P = ATC

A condition where price equals average total cost, indicating that firms are covering all their costs but not making economic profit.

Disequilibrium

A state where market supply and demand are not balanced, leading to excess supply or demand and price fluctuations.

Marginal Revenue Curve

A graphical representation showing how marginal revenue varies as output quantity changes.