If the absolute price of good X is $10 and the absolute price of good Y is $14, then what is (a) the relative price of good X in terms of good Y and (b) the relative price of good Y in terms of good X.

Question

Olive Leonard

Business

6 March, 05:11

If the absolute price of good X is $10 and the absolute price of good Y is $14, then what is (a) the relative price of good X in terms of good Y and (b) the relative price of good Y in terms of good X.

+5

Answers (1)

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Kent · Answer 1

1X = 5/7Y

1Y = 7/5Y

Explanation:

Relative price of product of X in terms of product Y is the price of product X expressed a fraction of product of Y, that is $10/$14=5/7, and it is expressed in standard terms 1X=5/7Y

The relative price of product Y in terms of product X is $14/$10=7/5 and also can be expressed in standard format as IY=7/5Y

All in all, product the relative price of product Y seems to be higher than the relative price of product x