What does the law of one price state?
A) A good cannot be sold at a black market price.
B) A good must sell at the price fixed by law.
C) A good must sell at the same price at all locations.
D) A good cannot sell for a price greater than the legal price ceiling.

Question

Quizplus · Accepted Answer

The law of one price states that a good must sell at the same price at all locations. This means that there should not be any price differences for the same good in different markets or locations. Any such differences would be eliminated through arbitrage, which involves buying the good in the market where it is cheaper and selling it in the market where it is more expensive. Therefore, the law of one price is a fundamental concept in economics that helps to ensure that markets are efficient and prices are fair.

What Does the Law of One Price State