What is meant by the "law of one price"?
A)Identical products should sell for the same price everywhere.
B)A law was passed in 1913 that made it illegal to sell the same good or service to different people for different prices.
C)This is a section of the Sherman Act that forced trusts (for example, the Standard Oil Company)to charge the same price for the same good or service in different states.
D)Foreign companies should not be allowed to sell a product in the United States for prices different from prices these companies charge in other countries.

Question

Quizplus · Accepted Answer

The "law of one price" states that identical products should sell for the same price everywhere. This is based on the principle of arbitrage, where if a product is being sold for a lower price in one location, buyers will attempt to purchase it and resell it in a location where the price is higher, until the prices equalize.

What Is Meant by the "Law of One Price