The "law of one price" states that
A)a good must sell at the price fixed by law.
B)a good must sell at the same price at all locations.
C)a good cannot sell for a price greater than the legal price ceiling.
D)nominal exchange rates will not vary.

Question

Quizplus · Accepted Answer

The "law of one price" asserts that in the absence of transportation costs and barriers to trade (like tariffs), a good should sell for the same price in all locations. This principle underlies the concept of purchasing power parity in international economics.

The "Law of One Price" States That