According to the Law of One Price

question 159

Multiple Choice

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.

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Definitions:

Modernity

A term referring to the period marked by the move from feudalism towards capitalism, industrialization, secularization, and the nation-state; represents the societal conditions and mindset resulting from these changes.

Capitalism

An economic system characterized by private or corporate ownership of capital goods, by investments determined by private decision, and by prices, production, and the distribution of goods determined primarily by competition in a free market.

Organic Solidarity

A type of social cohesion that arises when individuals in a society are interdependent but hold to varying tasks and responsibilities, characteristic of complex, industrial societies.

Collective Conscious

A shared set of beliefs, morals, and attitudes that operate as a unifying force within society; sometimes spelled as "collective conscience."