Sheppard Equilibrium - Become the richest person on earth by answering this simple question
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Will you purchase Product A in market 2?
Scenario:
Stakeholder A produces product A for price x
Stakeholder A sells product A in Market 1 for price y, receiving a profit of y- x
Product A can be sold in Market 2 for price z (z = y + y - x)
An investor would take advantage of the arbitrage opportunity between Market 1 and 2 and purchase product A in Market 1 and sell in Market 2.
The buyer of product A in Market 2 will pay z in exchange for product A and in one month will receive z - y (which is equal to y - x) from Stakeholder A.
You ONLY have access to Market 2. Would you buy product A in market 2?
If you are having issues, check out this podcast. It might help or just bore you.
**assume infinite supply for Product A
***I am Stakeholder A and yes I will provide you with x-y, trust me, it will be good for me