The law of one price holds exactly only if
A)antitrust laws are being enforced.
B)buyers have complete information.
C)transactions costs are zero.
D)it is impossible for buyers to resell the good.

Question

Quizplus · Accepted Answer

The law of one price states that identical goods or assets should have the same price in different markets after accounting for transaction costs. However, transaction costs can prevent arbitrage and hinder the equilibrium of prices. Therefore, the law of one price holds exactly when transaction costs are zero, and buyers can freely move goods or assets between markets until the prices are equalized. Antitrust laws, buyers' information, or resale opportunities do not necessarily affect the law of one price.

The Law of One Price Holds Exactly Only If