The law of one price states that differences in prices of the same product across markets will be eliminated by the actions of profit-seekers.

Question

Quizplus · Accepted Answer

The law of one price states that when the same product is traded in different markets without trade barriers, the market will naturally drive the price toward a single equilibrium point. If the price is not the same, arbitrageurs can profit by buying in the cheaper market and selling in the more expensive market, thus driving the prices towards equality.

The Law of One Price States That Differences in Prices