The Following Two Graphs Depict the Equilibrium Price of a Pound

question 113

Multiple Choice

The following two graphs depict the equilibrium price of a pound of grapes in California and West Virginia, respectively. Assume the type and quality of the grapes being sold in the two states are identical. Further, assume grape sellers incur zero costs to transport grapes between the two states and there are no other barriers to trade. Use these graphs to answer the following questions.
-Which of the following pairs of prices is consistent with the law of one price?

• A) California price: $0.50; West Virginia price: $0.80
• B) California price: $0.80; West Virginia price: $0.80
• C) California price: $1.20; West Virginia price: $1.20
• D) California price: $1.35; West Virginia price: $1.35
• E) California price: $1.50; West Virginia price: $1.50

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Definitions:

Adrenocorticotropic Hormone

A hormone produced by the pituitary gland that stimulates the adrenal cortex to secrete glucocorticoids, involved in stress response.

Cortisol

A type of glucocorticoid that provides a natural defense against inflammation and regulates carbohydrate metabolism.

Norepinephrine

One of two major neurotransmitters of the autonomic nervous system.

Sympathetic Nervous System

Part of the autonomic nervous system that prepares the body for rapid action in response to stress or danger, triggering the "fight or flight" response.