You Are Watching TV Late One Night and See an Ad

question 7

Short Answer

You are watching TV late one night and see an ad from Ronco for the Dial-o-matic food slicer.You learn that the Dial-o-matic sells for $29.95.But wait,there's more! Ronco is also including in this deal a set of Ginsu steak knives worth $10.95 and another free gift worth $7.95.Assuming that there is a competitive market for Ronco items,at what price must Ronco be selling this three item Dial-o-matic deal to ensure the absence of an arbitrage opportunity and uphold the Law of One Price?

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Definitions:

Upbringing

The treatment and education of a child by parents or guardians, including the social, cultural, moral, and behavioral training received during childhood.

Inhaled Poisons

Toxic substances that enter the body through the respiratory system leading to potential harm or discomfort.

Tinnitus

An abnormal ringing in the ear.

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A condition marked by severe pain in the chest, often also spreading to the shoulders, arms, and neck, caused by inadequate blood supply to the heart.