According To The Theory Of Purchasing Power Parity Why Should Identical Goods Have The Same Price In Different Location 1 (41.14 KiB) Viewed 9 times
According To The Theory Of Purchasing Power Parity Why Should Identical Goods Have The Same Price In Different Location 2 (25.73 KiB) Viewed 9 times
According to the theory of purchasing power parity, why should identical goods have the same price in different locations? O To prevent price gouging, international law mandates that identical goods must be sold for the same currency-adjusted price across all locations. If the goods were sold for two different prices, it would cause an increase in supply of the good at the low- price location and a decrease in supply of the good at the high-price location, which would cause the prices in each location to converge to the same price. O If the goods were sold for two different prices, it would cause an increase in supply of the good at the high- price location and a decrease in supply of the good at the low-price location, which would cause the prices in each location to converge to the same price. O If the goods were sold for two different prices, it would cause a decrease in demand of the good at the low- price location and an increase in demand of the good at the high-price location, which would cause the prices in each location to converge to the same price. O Consumers will only buy those goods which they feel are fairly priced.
A currency exchange rate is the price of a foreign currency, indicating how much a unit of foreign currency costs in terms of another currency. rate of trade between currencies, indicating the volume and speed at which currencies are traded. opportunity cost of a foreign currency, indicating the value lost by choosing one currency over another. rate of currency circulation, indicating the volume and speed at which a currency circulates throughout the global economy. price of a foreign currency, indicating the price of a unit of currency in terms of U.S. dollars.
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