If apples sell for $50 per box in the United States and 2000 pesos per box in Mexico,the law of one price asserts that you should be able to exchange $1 for 25 pesos.

Question

Quizplus · Accepted Answer

The law of one price states that in a perfectly efficient market, identical goods should have the same price regardless of location or currency. Therefore, if apples are selling for $50 per box in the United States and 2000 pesos per box in Mexico, it is not necessarily true that $1 should be worth 25 pesos. The exchange rate would depend on various factors such as currency supply and demand, market efficiency, and government intervention.

If Apples Sell for $50 Per Box in the United