Post Utme Elizade University 2022 Commerce Question 26

Practice objective / multiple choice question 26 from the 2022 Post Utme Elizade University Commerce examination.

Post Utme Elizade University 2022 Commerce Objective / Multiple Choice
Question 26 POST_UTME_ELIZADE_UNIVERSITY • 2022 • COMMERCE • objective

In a perfectly competitive market, the law of one price dictates that the price of a commodity will be equalized across all markets, assuming that there are no transportation costs and no trade barriers. However, if transportation costs are incurred, the price of the commodity will be higher in the market that is farther away from the production location. Which of the following is a correct statement regarding the law of one price?

Answer Options

A. The law of one price is a fundamental concept in international trade that ensures that prices of identical goods are equal across different markets.
Correct Answer B. The law of one price is violated when transportation costs are incurred, leading to price differences across markets.
C. The law of one price is a myth, and prices of commodities vary significantly across different markets.
D. The law of one price is only applicable in perfectly competitive markets with no trade barriers.
Correct Answer
B
Correct Option:
The law of one price is violated when transportation costs are incurred, leading to price differences across markets.

About This Question

This is Post Utme Elizade University 2022 Commerce Question 26. It is one of the objective questions from the 2022 Post Utme Elizade University Commerce examination.

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