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Applied to International Trade,the Law of One Price Says That

Question 98

Multiple Choice

Applied to international trade,the law of one price says that


A) trade barriers are ineffective in fixing the price of goods,because the exchange rate will always appreciate or depreciate accordingly.
B) supply and demand will set a single price only for identical goods sold in the same location.
C) the global market will seek to price identical goods the same everywhere.
D) after accounting for transportation costs and trade barriers,identical goods sold in different locations must sell for the same price.
E) there is one ideal price for any given good,which efficiently accounts for transportation costs.

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