The Law of One Price Is That

question 87

Multiple Choice

The law of one price is that:

• A) only one price can be charged for an item in a contract deal.
• B) in an efficient market, one price only is the permissible price.
• C) in an efficient market, like goods will have like prices.
• D) even in international markets, bait and switch is illegal.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, including rent, salaries, and insurance, providing contrast to variable costs.

Operating Income

Earnings before interest and taxes (EBIT), calculated as gross income minus operating expenses, excluding non-operating income and expenses.

Variable Product Cost

Costs that vary directly with the level of production, such as materials and labor.

Total Fixed Overhead

The sum of all costs that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance.