(Answered) Arbitrage increases total welfare.TrueFalseArbitrage increases total welfare.TrueFalse

➤ Does arbitrage always increase total welfare?
Not always. In frictionless, competitive markets arbitrage removes price discrepancies and raises total surplus. But when transaction costs, information asymmetries, taxes, market power, or negative externalities exist, arbitrage can be limited or even reduce net welfare. The net effect depends on market structure and institutional details.