The law of one price fails as a result of:
A)Low tariffs
B)Insignificant transportation costs
C)Similar technical specifications
D)Goods that cannot be traded

Question

Quizplus · Accepted Answer

The law of one price assumes that goods can be traded across borders, which is not possible in the case of goods that cannot be traded. Therefore, the law of one price fails in this case. The other options, i.e., low tariffs, insignificant transportation costs, and similar technical specifications, actually facilitate the application of the law of one price.

The Law of One Price Fails as a Result Of