In the globalized model, the eventual equivalency of domestic and world prices follows from the:
A)law of demand.
B)law of supply.
C)law of comparative advantage.
D)law of one price.

Question

Quizplus · Accepted Answer

The law of one price asserts that in an efficient market, all identical goods must have only one price when price differences are adjusted for exchange rates. This principle underlies the eventual equivalency of domestic and world prices in a globalized model, as arbitrage eliminates price differences.

In the Globalized Model, the Eventual Equivalency of Domestic and World