The law of one price states
A) federal and state statutes that prohibit price discrimination.
B) that identical products should sell for the same price everywhere.
C) that all customers should pay the same price.
D) government regulation of prices for all firms.
B
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If pepperoni pizzas sell for $10 in Berkeley, California, and £10 in London, England, and the exchange rate is $1.35 = £1,
A) the law of one price has been violated. B) either the British government or the American government must be interfering with the market determination of the exchange rate. C) the value of the dollar versus the pound is likely to rise. D) there is no contradiction in the information given because pizza is not a tradeable good.
Commercial banks are financial intermediaries, as are ________
A) household savers B) state and local governments C) insurance companies D) organized exchanges
As the Fed shifted to a highly expansionary monetary policy during the second half of 2008, why were banks reluctant to extend loans and make investments?
a. Banks did not have enough excess reserves to extend loans and make investments. b. The demand for loans was weak and the business climate was uncertain. c. The rate of return on short-term investments was high, so banks were reluctant to make long-term investments. d. The interest rate that the Fed pays on excess reserves was maintained at a high rate.
If a tax is levied on the sellers of a product, then there will be a(n)
a. downward shift of the demand curve. b. upward shift of the demand curve. c. decrease in quantity demanded. d. increase in quantity demanded.