A specific model of a laptop computer sells for $1,200 in New York and for €1,000 in Berlin. The current exchange rate is $1.25 per €1.00. Assuming there are no transaction costs, shipping fees, or trade barriers, which of the following statements accurately analyzes this market situation?

Arbitrage Opportunity in the Coffee Market

Real-World Price Discrepancies

The Enforcement Mechanism of Price Convergence

The Law of One Price states that an identical product will sell for the same price in different locations, even when significant transportation costs and trade barriers exist between them.

Match each economic term with the description that best fits its role in the context of price equalization across different markets.

A specific brand of smartphone is discovered to be selling for a lower price in Country A than in Country B, after converting both prices to a common currency and accounting for all costs. Arrange the following events in the logical sequence that describes how the market would react to this price difference, eventually leading to price convergence.

The process of simultaneously buying a good at a low price in one market and selling it at a higher price in another to profit from the price discrepancy is known as ____. This action is the key mechanism that causes prices for the same good to converge across different locations.

Applicability of Price Convergence

Suppose the price of a standardized gold bar, when expressed in a common currency, is significantly lower in Zurich than in Mumbai. Assuming no trade barriers, transaction costs, or transportation issues, what is the most likely immediate outcome of this situation in the two markets?