The law of one price states that the same commodity must sell at the same price in a well-functioning market.

Question

Quizplus · Accepted Answer

The law of one price is based on the assumption of a well-functioning market, where there are no restrictions on trade or information asymmetries. In such a market, the same commodity should sell at the same price, whether it is in one location or another, as transportation costs and other factors are taken into account.

The Law of One Price States That the Same Commodity