For which of the following is the law of one price least likely to hold?
A)Haircuts
B)Gold
C)US Treasury Bonds
D)Petroleum

Question

Quizplus · Accepted Answer

The law of one price states that in the absence of transaction costs and assuming perfect information, identical goods should have the same price when prices are expressed in a common currency. The law is least likely to hold for non-homogeneous goods or services that cannot be easily traded across locations, such as haircuts. Unlike gold, US Treasury Bonds, and petroleum, which are homogeneous and traded globally, haircuts are services that are highly localized and vary significantly in quality and style, making the law of one price less applicable.

For Which of the Following Is the Law of One