Practice question · Sort into groups
Sort each activity: Schumpeterian innovation or Kirznerian arbitrage?
Groups: Innovation (new combination) · Arbitrage (exploiting a gap)
- Reorganizing production into a novel assembly line
- Importing a product popular abroad but missing locally
- Inventing a new payment method
- Buying cheap in one region to resell where prices are high
- Launching the first electric scooter-sharing service
Hints
- Ask whether something genuinely new was created or something existing was moved.
- Buying low and selling high creates no new combination.
Show the answer
Innovation (new combination): Launching the first electric scooter-sharing service, Inventing a new payment method, Reorganizing production into a novel assembly line
Arbitrage (exploiting a gap): Buying cheap in one region to resell where prices are high, Importing a product popular abroad but missing locally
Why
Innovation creates combinations that did not exist; arbitrage moves existing things to where they are worth more.
Practise The Entrepreneur
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