Which of the following is/are the assumptions of the Law of One Price ? (i) Restriction on the movement…

The Law of One Price (the microeconomic foundation of Purchasing Power Parity) states that in competitive markets free of trade frictions, identical goods sold in different countries must sell for the same price when expressed in a common currency. This law assumes free international arbitrage with (ii) No transportation costs and (iii) No tariffs or official trade barriers (meaning statement i is false). Thus, 'Both (ii) and (iii)' is correct.