The law of one price
A)states that consumers can only buy one good or service at a time.
B)is a law passed by Congress that prohibits firms from selling a product at two different prices in the same market at the same time.
C)states that consumers will pay any price for a product that has a perfectly inelastic demand curve.
D)states that identical products should sell for the same price everywhere.

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 idea of arbitrage, which suggests that if there are any differences in price for identical products, then traders can profit by buying the product in the lower-priced market and selling it in the higher-priced market, leading to the prices converging over time.

The Law of One Price