Macroeconomics 8th Edition by David Colander

Exercise 2

One of the basic economic laws is "the law of one price." It says that given certain assumptions one would expect that if free trade is allowed, the price of goods in countries should converge.
a. Can you list what three of those assumptions likely are?
b. Should the law of one price hold for labor also? Why or why not?
c. Should it hold for capital more so or less so than for labor? Why?