The law of one price states that identical goods sold in two countries should have the same price when expressed in the same currency.

Question

Quizplus · Accepted Answer

The law of one price asserts that in the absence of transportation costs and barriers to trade like tariffs, the price of an identical good should be the same in different markets when prices are expressed in a common currency. This principle underlies the theory of purchasing power parity.

The Law of One Price States That Identical Goods Sold