Which of the Following Statements Is TRUE Regarding Arbitrage

question 15

Multiple Choice

Which of the following statements is TRUE regarding arbitrage?

• A) It is easier to prevent arbitrage for some products than for others.
• B) The U.S. Constitution prevents the government from engaging in arbitrage prevention.
• C) Arbitrage may increase the profits for firms, depending on the elasticity of demand in the market.
• D) Firms will still be able to price discriminate across markets even when arbitrage is present.

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Definitions:

Direct Labor Time Variance

The difference between the actual hours spent on production and the standard hours expected, multiplied by the standard hourly wage rate.

Actual Costs

are the genuine expenditures incurred in the production or acquisition of goods and services, as opposed to estimated or standard costs.

Standard Costs

Pre-determined or benchmark costs for products, operations, or activities, used for budgeting purposes and performance evaluation against actual costs.

Direct Labor Time Variance

The difference between the actual time taken to perform work and the estimated standard time, adjusted for units produced.