3. The law of one price

Which of the following is predicted by the law of one price? 0 In ideally efcient markets, the cost of a general bundle of goods and services should be about the same regardless of where they are produced. 0 The nominal exchange rates should always be the same as the real exchange rates, both in the short run and in the long run. 0 In ideally efcient markets, the cost of a general bundle of goods and services will be lower in countries with lower productivity. Which of the following scenarios illustrates why the law of one price may not hold? Check all that apply. Steel is very heavy, and the cost of shipping is measured by weight. The formation of the European Union creates a custom union among its member states, where internally traded goods are not subject to custom duties, tariffs, or import quotas. Small electronic devices, such as digital cameras, are relatively light and can be shipped in bulk