Which of the Following Is an Example of the Law

question 41

Multiple Choice

Which of the following is an example of the law of one price?

• A) Exchange rates tend to have equivalent values. For example, one euro equals one U.S. dollar.
• B) Because people have essentially the same basic needs wherever they live, they tend to buy the same bundle of goods.
• C) Because wages are so much lower in China, eventually all U.S. jobs will be outsourced to China, leaving the United States to import all goods at one price.
• D) Because their countries have similar institutions, computer programmers in Germany and the United States either are or will be paid about the same.

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Definitions:

Haphazard Way

A manner of doing something that lacks organization, planning, or direction, often leading to unpredictable results.

Sunk Cost Effect

The decision-making bias where people continue an endeavor once an investment in money, effort, or time has been made, regardless of the current costs outweighing the benefits.

Availability Heuristic

A quick mental leap utilizing examples that spontaneously arise in an individual's thoughts during the evaluation of a specific subject, concept, technique, or decision-making process.

Confirmation Bias

The predisposition to explore, decode, favor, and reminisce facts in a fashion that corroborates one's preconceived notions or speculations.