Which of the following statements is the most accurate? The law of one price states:
A) in competitive markets free of transportation costs and official barrier to trade, identical goods sold in different countries must sell for the same price when their prices are expressed in terms of the same currency.
B) in competitive markets free of transportation costs and official barrier to trade, identical goods sold in the same country must sell for the same price when their prices are expressed in terms of the same currency.
C) in competitive markets free of transportation costs and official barrier to trade, identical goods sold in different countries must sell for the same price.
D) identical goods sold in different countries must sell for the same price when their prices are expressed in terms of the same currency.
E) in competitive markets free of official barrier to trade, identical goods are sold at the same price regardless of transportation costs.

Question

Quizplus · Accepted Answer

The law of one price states that in a competitive market free of transportation costs and official barriers to trade, identical goods sold in different countries must sell for the same price when their prices are expressed in terms of the same currency. This means that if there are no legal or transportation barriers to international trade, goods should have the same price regardless of their location.

Which of the Following Statements Is the Most Accurate? the Law