Multiple choice

Free international trade leads to equalisation of

  1. prices in both the countries

  2. commodities of both the countries

  3. international price with domestic price

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Free international trade leads to price equalization between countries through the law of one price - identical goods should sell for the same price when expressed in common currency, after accounting for transportation costs and tariffs.

Keep practicing — related questions