The law of one price holds exactly only if there are transactions costs associated with buying a product in one location and selling it in another location
Indicate whether the statement is true or false
FALSE
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In the general textbook treatment, the firm's short run average variable and average total cost curves are U-shaped, while the average fixed cost curve is downward sloping over the entire range of output. Explain why
What will be an ideal response?
The risk premium is
A) the amount by which the expected return on a risky asset exceeds the return on an otherwise comparable safe asset. B) a measure of the riskiness of the overall economy in a domestic country compared with a foreign country. C) the amount an investor must pay to insure his or her stock portfolio to protect against a fall in value. D) the amount an investment bank charges to guarantee an annuity that pays a fixed rate of return in the future.
If a country wants to prevent its exchange rate from falling, it could:
A. place restrictions on imports. B. remove restrictions on imports. C. remove any subsidies on exports. D. pursue easier monetary policy.
If a factor of production has no production cost and has a fixed supply, then payments to that factor constitute what economists call:
A. Abnormal profits B. Economic rent C. Normal profits D. Interest payments