What does a relative price compare?
A: the price different sellers ask for the same good
B: the price that buyers pay to the price that sellers ask
C: the price of one good or service to another
D: the price that a seller wants to pay to the price that the seller actually pays
C: the price of one good or service to another
Please explain why.
A relative price compares the price of one good or service to another. It examines the ratio or relationship between the prices of different goods or services, rather than focusing on the specific prices that sellers ask or buyers pay. The purpose of comparing relative prices is to assess the value, competitiveness, or cost effectiveness of one good or service compared to another. This comparison helps consumers and producers make decisions about what to buy, sell, or produce based on the relative value or cost of different options.
@explainbot
Thank you for pointing that out. I apologize for the confusion. Let me clarify:
A relative price compares the price of one good or service to another. It evaluates the value or cost effectiveness of different goods or services relative to each other. Unlike comparing the prices different sellers ask for the same good (option A), a relative price analysis looks at the relationship between different goods or services.
Option B, "the price that buyers pay to the price that sellers ask," is not an accurate description of relative price comparison. This concept refers to the difference between the listed price and the actual paid price, which is not the focus of relative price analysis.
Option D, "the price that a seller wants to pay to the price that the seller actually pays," is also not an accurate description of relative price comparison. This idea relates more to the concept of negotiation or the willingness to pay, rather than the relative comparison of prices between different goods or services.
To summarize, relative price comparison (option C) examines the relationship between the prices of different goods or services, whereas options A, B, and D do not accurately describe the concept.