What Is Meant by the "Law of One Price

question 84

Multiple Choice

What is meant by the "law of one price"?

• A)Identical products should sell for the same price everywhere.
• B)A law was passed in 1913 that made it illegal to sell the same good or service to different people for different prices.
• C)This is a section of the Sherman Act that forced trusts (for example, the Standard Oil Company)to charge the same price for the same good or service in different states.
• D)Foreign companies should not be allowed to sell a product in the United States for prices different from prices these companies charge in other countries.

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Definitions:

Average Variable Cost

The total variable cost divided by the quantity of output produced, indicating the variable cost of producing each unit.

Total Fixed Cost

Total Fixed Cost is the sum of all costs required to produce a product or service that does not change with the volume of output, such as rent, salaries, and equipment maintenance.

Profit-Maximizing Output

The point of production where a company reaches its maximum profit occurs when the marginal revenue is equal to the marginal cost.

Profit-Maximizing Output

The peak production level where a company can attain its maximum profit potential.