Question

Assuming zero transactions costs, if your local grocer buys oranges at a low price from an orchard and resells them to you at a higher price, then the grocer's revenue minus costs is known as

Answer 1

The arbitrage profits to the grocer.

Step-by-step explanation:

Arbitrage refers to the process of simultaneous purchase and sale of an asset to earn profits. The traders exploit the price difference in different markets through arbitrage.

Here, in the given example, the purchase of oranges from the orchard and then its resale to the consumers is an example of arbitrage. The orchard and consumers are in two different markets.

The profit earns through this purchase and sale of oranges will be considered arbitrage profit.