According to the Law of One Price,if two countries produce an identical good,assuming transportation costs and trade barriers are not an issue ________.

Question

Quizplus · Accepted Answer

The Law of One Price states that if two countries produce an identical good, assuming transportation costs and trade barriers are not an issue, one unit of the good has the same value in either country. Therefore, the best choice is B, which is that one unit of the good has the same value in either country. The other choices are incorrect. A is incorrect because the nominal exchange rate may not be 1.0, and it is not necessarily related to the Law of One Price. C is incorrect because the Law of One Price is not related to the exchange rate between the two countries. D is incorrect because the national price level may not be the same in the two countries.

According to the Law of One Price,if Two Countries Produce