A product sells for $50 in the United States and for 1,700 baht in Thailand. If the exchange rate is $1 = 33 Thai baht, what would be expected to happen according to the law of one price?
A) The U.S. price will continue to be $50, and the Thai price will continue to be 1,700 baht.
B) The baht price will fall and the dollar price will rise until the exchange rate-adjusted prices are equal.
C) The baht price will rise and the dollar price will fall until the exchange rate-adjusted prices are equal.
D) Both prices will fall to $48.
Correct Answer:
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