what is relative price

Answer 1

Relative price refers to the price of a good or service in comparison to another good or service. It is a measure of the exchange ratio between two goods in a market. For example, if the price of apples is $2 per pound and the price of oranges is $3 per pound, the relative price of oranges in terms of apples would be 1.5 (3/2). It helps determine the opportunity cost of one good in terms of another and influences consumer choices and resource allocation.