What is the process of purchasing a product in one market at a low price and selling it in another market at a higher price called?

The process of purchasing a product in one market at a low price and then selling it in another market at a higher price is called arbitrage. This term specifically refers to the practice of taking advantage of price differences in different markets to make a profit. Arbitrage plays a crucial role in financial markets, as it helps to ensure that prices do not deviate significantly from their true value by creating demand in lower-priced markets and supply in higher-priced ones.

In this context, arbitrage involves not just buying and selling goods or assets but also exploiting the differences in price due to market inefficiencies. This practice requires quick action and keen observation of market conditions, as the opportunity for profit can diminish rapidly once other traders also recognize the price discrepancy.

The other terms listed have different meanings. Speculation involves making high-risk financial transactions in the hope of significant returns based on future price movements. Trading generally refers to the act of buying and selling assets but does not imply the specific price discrepancy aspect of arbitrage. Flipping is often associated with real estate or collectibles, where an item is bought and sold quickly for profit, but it lacks the broader market application of arbitrage. Therefore, arbitrage is the most precise term for the described process.