[amp_mcq option1=”Bertrand’s Law” option2=”the Law of Universal Prices” option3=”the Law of One Price” option4=”the Law of Perfect Commerce” correct=”option1″]
The correct answer is: A. Bertrand’s Law
Bertrand’s Law is a model of competition in which firms produce identical goods and compete on price. The law states that in a market with complete price transparency, firms will eventually drive prices down to marginal cost, resulting in zero profits for all firms.
The Law of Universal Prices states that in a perfect market, identical goods will sell for the same price regardless of where they are sold. This is because buyers and sellers have perfect information about prices and can easily compare prices across different markets.
The Law of One Price states that in a perfect market, identical goods will sell for the same price in different countries, even when exchange rates are taken into account. This is because buyers and sellers have perfect information about prices and can easily compare prices across different countries.
The Law of Perfect Commerce states that in a perfect market, all goods and services will be available at the same price, regardless of who is selling them. This is because buyers and sellers have perfect information about prices and can easily compare prices across different sellers.
In conclusion, Bertrand’s Law is the only law that requires complete price transparency in a perfect information marketplace.