The law of one price works under some assumptions. Which of the following is NOT an assumption for the law of one price?
A) There is free competition.
B) There is no transportation cost.
C) There are no tariffs.
D) The skill level of workers is identical in both countries.

Question

Quizplus · Accepted Answer

The law of one price assumes that there are no barriers to trade, such as tariffs or transportation costs, and that there is free competition between buyers and sellers. However, it does not require that the skill level of workers be identical in different countries.

The Law of One Price Works Under Some Assumptions