Jehovis, Arcamik, Riberia, and Finsik are countries in Eastern Europe. In these countries, electronic goods move freely across national borders without the friction of trade barriers, transportation costs, or perishability. These goods carry the same monetary value in all these countries. This scenario illustrates _____.
A) the law of one price
B) deregulation
C) privatization
D) a floating exchange rate

Question

Quizplus · Accepted Answer

The law of one price states that in the absence of trade barriers and transportation costs, and assuming perfect market conditions, identical goods should have the same price when expressed in the same currency. This scenario, where electronic goods move freely and carry the same monetary value across different countries, aligns with the law of one price.

Jehovis, Arcamik, Riberia, and Finsik Are Countries in Eastern Europe