The Law of One Price Works Under Some Assumptions

question 63

Multiple Choice

The law of one price works under some assumptions. Which of the following is NOT an assumption for the law of one price?

• A) There is free competition.
• B) There is no transportation cost.
• C) There are no tariffs.
• D) The skill level of workers is identical in both countries.

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Definitions:

Nonprofit Organizations

Entities that operate for a collective, public or social benefit, rather than to generate profits for owners or investors.

Environmental Scanning

A process used by companies to monitor their external and internal environments to detect early signs of opportunities and threats that may influence future strategies.

Market Opportunities

Identifiable segments within a market where a company can focus its efforts to offer a product or service that meets a need, often through competitive advantage.

Recession

A phase of brief economic downturn characterized by decreased trade and manufacturing activity, typically recognized by a drop in Gross Domestic Product for two consecutive quarters.