When comparative advantage is based on transferable factors, the law of one price tends to:
A) erode the advantage away.
B) amplify the advantage.
C) stabilize the advantage.
D) make the advantage into an inherent comparative advantage.

Question

Quizplus · Accepted Answer

When comparative advantage is based on transferable factors, the law of one price tends to erode the advantage away because transferable factors can move to where they are most valued, equalizing prices and diminishing the initial advantage.

When Comparative Advantage Is Based on Transferable Factors, the Law