According to the law of one price,
A)if transaction costs are zero, identical goods should sell for the same price everywhere.
B)if transactions costs are zero, firms must sell a product at a price equal to its marginal cost.
C)if transactions costs are zero, all firms must earn the same profit margin.
D)there must be no differences in the cost of producing identical goods by different producers.

Question

Quizplus · Accepted Answer

The law of one price states that, in the absence of transaction costs and trade barriers, identical goods should sell for the same price everywhere. This means that consumers should be willing to pay the same amount for a product regardless of where it is sold or produced. If there are differences in the price of identical goods, arbitrage opportunities would arise, where people would buy the cheaper product and sell it in the more expensive market until the prices equalize. Therefore, for a competitive market to exist, the law of one price must hold.

According to the Law of One Price