The Law of One Price States That If Transportation Costs

question 80

Multiple Choice

The law of one price states that if transportation costs are relatively small, then the:

• A)nominal exchange rates for every country's currency must be equal.
• B)nominal exchange rate for a currency must equal the real exchange rate for that currency.
• C)price of an internationally traded commodity must be the same in all locations.
• D)producer with the lowest opportunity cost should be the only producer any commodity.

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Definitions:

3,4-methylenedioxymethamphetamine

A psychoactive drug, known commonly as MDMA or ecstasy, which has stimulant and psychedelic effects, often used recreationally.

Ecstasy

A psychoactive drug known chemically as MDMA, often used recreationally for its effects like increased energy, emotional warmth, and distorted time and sensory perceptions.

Mary Jane

A slang term commonly used to refer to marijuana, a psychoactive drug from the Cannabis plant used for medical or recreational purposes.

Cannabis

Substance that causes feelings of well-being, perceptual distortions, and paranoid thinking.