If the price of computers falls 6 percent during a period when the level of average prices falls 12 percent, the relative price of computers compared with other goods:

Question

a) Stays the same.
b) Increases.
c) Decreases.
d) More information is required to answer this question.

Answer 1

0.94/0.88 = 1.068

Relative to other goods, computers become 6.8% higher.