If firms differentiate their products in different ways and charge different price because of these differentiation factors, then
A)the law of one price is not violated.
B)transactions costs are being ignored.
C)the firm must not be maximizing profit.
D)demand must be perfectly elastic.

Question

Quizplus · Accepted Answer

The law of one price states that identical goods should have the same price in a perfectly competitive market, but if firms are differentiating their products, then they are not identical and therefore the law of one price is not violated.

If Firms Differentiate Their Products in Different Ways and Charge