Post Utme Abu 2022 Commerce Question 31

Practice objective / multiple choice question 31 from the 2022 Post Utme Abu Commerce examination.

Post Utme Abu 2022 Commerce Objective / Multiple Choice
Question 31 POST_UTME_ABU • 2022 • COMMERCE • objective

In a perfectly competitive market, the law of one price dictates that the price of a commodity will be equal in all markets, assuming that there are no transportation costs or other barriers to trade. However, in reality, transportation costs and other barriers can lead to price differences between markets. Which of the following is a consequence of these price differences?

Answer Options

Correct Answer A. Arbitrage opportunities arise, leading to the equalization of prices across markets.
B. The law of one price is violated, resulting in price differences between markets.
C. The market becomes less competitive, leading to higher prices.
D. The commodity becomes less desirable, leading to lower demand.
Correct Answer
A
Correct Option:
Arbitrage opportunities arise, leading to the equalization of prices across markets.

About This Question

This is Post Utme Abu 2022 Commerce Question 31. It is one of the objective questions from the 2022 Post Utme Abu Commerce examination.

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