Which of the Following Does Not Explain Why the Law

question 19

Multiple Choice

Which of the following does not explain why the law of one price fails?

• A) products have different standard sizes and features in different countries
• B) transporting a good to a distant market raises its cost
• C) goods imported across borders are often subject to tariffs
• D) nominal exchange rates do not change as often as product prices
• E) firms may set prices to be competitive in local markets regardless of production and distribution costs

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Definitions:

Make Or Buy Analysis

A decision-making process used by companies to determine whether products or services should be produced internally or purchased from an external supplier.

Lowest Cost Alternative

A cost-minimization strategy that involves choosing the most economical option among different possible choices.

Evaluate Possible Courses

The process of examining and considering all potential actions to determine the best course of action.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to fixed costs and profits.