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Consider the Trade of a Product Between Two Regions

Question 91

Multiple Choice

Consider the trade of a product between two regions.If it is very inexpensive to move the product from one regional market to another,then the


A) "law of one price" argues that it will sell for approximately the same price in all markets.
B) price it sells for in every country will depend on the cost of labour in the single low-cost country in which the product was produced.
C) difference in the price from one market to another will depend on the relative elasticities of supply in the separate markets.
D) absolute cost of producing the product must be the same in all markets.
E) production of the world supply will be from the single country with the lowest absolute cost of producing it.

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