Mitch is on vacation with the family and stops by the tackle shop to see an old friend. The owner of the local bait shop tells him the worms he sells are twice the price by the lake as they are in town. People who are already at the lake probably aren’t willing to drive back to town to save a few cents, so the bait shop can markup the price and exploit this arbitrage opportunity. From an elasticity standpoint, this implies that people fishing at the lake are insensitive to the price of worms, or we would say their demand for worms is inelastic.
See more: arbitrage, elasticity, inelastic, markup price, price discrimination