In her school's food court, Molly notices that a carton of juice costs $1.75 and a can of soda costs $1.25. Since Molly just finished studying for an economics exam, she immediately calculates that the relative price of a carton of juice is per. Suppose that school administrators want to encourage healthy choices and decide to impose a $0.25 price increase on cans of soda. Given that the absolute price of a carton of juice is unchanged, the relative price of a carton of juice.

Question

Steve Harrell

Business

11 February, 14:27

In her school's food court, Molly notices that a carton of juice costs $1.75 and a can of soda costs $1.25. Since Molly just finished studying for an economics exam, she immediately calculates that the relative price of a carton of juice is per. Suppose that school administrators want to encourage healthy choices and decide to impose a $0.25 price increase on cans of soda. Given that the absolute price of a carton of juice is unchanged, the relative price of a carton of juice.

+4

Answers (1)

Know the Answer?

Cael · Answer 1

The computation is shown below:

Relative price of a carton of juice = Cost of carton of juice : Cost of can of soda

= $1.75 : $1.25

= 1.4

And, the relative price of a carton of juice if the absolute price of a carton of juice is unchanged

Relative price of a carton of juice = Cost of carton of juice : Cost of can of soda

= $1.75 : $1.50

= 1.167

Therefore, the relative price is decreased