The Following Two Graphs Depict the Equilibrium Price of a Pound

question 14

Multiple Choice

The following two graphs depict the equilibrium price of a pound of flax seed in Kentucky and West Virginia, respectively. Assume the type and quality of the flax seed being sold in the two states are identical. Further, assume flax seed sellers incur zero costs to transport flax seed between the two states and that there are no other barriers to trade. Use these graphs to answer the next two questions:


-Suppose the price of a pound of flax seed in West Virginia is currently $1.00.The law of one price suggests that because the price of a pound of flax seed is $1.20 in Kentucky,the price of a pound of flax seed will be ___________ in West Virginia after sellers adjust their supply in both markets.

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Definitions:

Gluteal Tuberosity

The bony prominence on the proximal femur where some of the gluteal muscles attach.

Pelvic Bone

A structure at the base of the spine consisting of three bones: ilium, ischium, and pubis, supporting the spine and protecting lower abdominal and internal reproductive organs.

Fibula

A long, thin bone located on the lateral side of the tibia, in the lower leg.

Calcaneus

Also known as the heel bone, the calcaneus is crucial for walking, running, and jumping, absorbing impact and providing leverage.