Scooby-Doo Arbitrage

A student writes that she understood arbitrage at age seven.  She brought Scooby-Doo Fruity Snacks from her grandmother’s house (no charge to my student) to her Vacation Bible School class.  She was a monopolist in the class—nobody else brought snacks; and since the demand was quite inelastic, she was able to sell her Fruity Snacks for a good price.  Regrettably, her business was shut down because, as the teacher said, she was engaging in “uncharitable exploitation of [her] peers.”  She was also invited not to return to Bible School, showing that clever economic behavior may only  pay monetarily. (HT: CAP)


Seminymous Coward

Sounds like a double win to me.

Nanno

Since when is not having to return to Fairytale School not a payoff?

Kahomono

She made money and got out of VBS. Win-win!

E

Be still, my heart.

mike

I dunno, getting kicked out of Bible School sounds like a win-win to me.

Ian M

Bible school, eh.

WWJD?

He would have made 7 Scooby-Doo Snacks into many more. He would have then sold them for nothing less than homage.

JAM

She probably made the mistake of not offering the governing authorities of the school a cut of her profits.

Lew

Is there such a thing as "charitable exploitation of one's peers"?

JJ

She probably should have donated a portion of her profits to charity.

Dave

Obviously, the teacher didn't understand that trade isn't a zero sum game

Darren

Can we please stop misusing the term "arbitrage" to mean any variation of "buying and selling something at a profit"? Arbitrage is buying and selling the same thing in different markets simultaneously to recognize a profit. She didn't arbitrage anything -- she engaged in good old-fashioned trade. She found a supplier who would sell her a product for zero dollars, and she later found buyers who would pay her more than her cost, realizing a profit.

SunnyvaleCA

This isn't an example of arbitrage; it's an example of nepotism. Arbitrage involves taking advantage of a price discrepancy in two (or more) markets. However, there is only one market here, as the grandmother never offered the food to anyone but the granddaughter. This seems like simply taking advantage of the grandmother's generosity toward a relative.

Never-the-less, congratulations are in order for not being invited back to bible school!

SunnyvaleCA

The granddaughter reduced her (eventual) inheritance by inducing the grandmother to spend more money replenishing the snacks. Since the market price at the bible class wasn't known at the time of getting the goods from the grandmother, there was an risk that the granddaughter would lose more inheritance than she collected on the sale. If there is a risk in the transaction, then it is, by definition, not arbitrage.

Mikemenn

Sounds plausible, but unlikely. Source please.

BC

Quite timely post, given the current gasoline shortages in New Jersey and New York. By outlawing the student's "price gouging", the teacher effectively ensured that the other students would be denied fruity snacks going forward. It's too bad that Govs. Cuomo and Christie weren't in this bible class.

Zack

When I was in middle school, I would buy a 100 pack of bubble gum for 5 bucks and sold each piece for a quarter. This returned a 400% profit, until I was caught.