What is Relative Price?
Relative price is a comparison of the price of a good or service in relation to another good or service. It is used to determine the cost or value of one item relative to another. This can be used to compare different items of the same type or different items of different types.
Examples of Relative Price
One common example of relative price is comparing the cost of items at different stores. For example, if one store is selling a box of cereal for $3 and another store is selling it for $4, the relative price for the cereal is $4/$3 or 1.33. This is the price of the cereal at one store relative to the price of the same cereal at another store. Another example of relative price is comparing the cost of different types of items. For example, if a gallon of milk costs $3 and a dozen eggs cost $2, the relative price of eggs is 2/$3 or 0.67. This is the price of the eggs relative to the price of the milk.
Using Relative Price
Relative price can be used to compare different items or services to determine which is a better value. For example, if one store is selling a box of cereal for $3 and another store is selling it for $4, the relative price for the cereal is $4/$3 or 1.33. This means that the cereal at the second store is more expensive than the cereal at the first store. Relative price can also be used to compare the cost of items of different types. For example, if a gallon of milk costs $3 and a dozen eggs cost $2, the relative price of eggs is 2/$3 or 0.67. This means that the eggs are a better value than the milk.
Conclusion
Relative price is a useful tool for comparing the cost of different items or services. It is used to determine the cost or value of one item relative to another. This can be used to compare different items of the same type or different items of different types. By using relative price, it is possible to compare different items or services to determine which is a better value.
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