In the international goods market, prices of goods in different countries expressed in a common currency must be equalized. This concept is called:

Question

Quizplus · Accepted Answer

The law of one price states that the prices of identical goods in different countries must be equalized when expressed in a common currency. This is because if there is a difference in prices, traders will buy the good in the country where it is cheaper and sell it in the country where it is more expensive, thereby eliminating the price difference.

In the International Goods Market, Prices of Goods in Different