Market differences across regions, states, or neighborhoods create opportunities for:

• A. monopsony power
• B. perfect competition
• C. arbitrage
• D. price ceilings

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of market differences. These differences can arise due to variations in demand, supply, transportation costs, or regulations across regions, states, or neighborhoods.
2. Step 2: Recognize that such differences create opportunities for arbitrage, which is the practice of buying a good in one market at a lower price and selling it in another market at a higher price to earn a profit.
3. Step 3: Recall that arbitrage helps equalize prices across different markets by exploiting price differences, thereby reducing market inefficiencies.
4. Step 4: Differentiate arbitrage from other options: monopsony power refers to a single buyer's market power, perfect competition is a market structure with many buyers and sellers, and price ceilings are government-imposed limits on prices.
5. Step 5: Conclude that the presence of market differences specifically enables arbitrage opportunities, making it the correct answer.