Relative price

A relative price is the price of the commodity such(a) as a good or service in terms of another; i.e., the ratio of two prices. A relative price may be expressed in terms of a ratio between the prices of any two goods or the ratio between the price of one good in addition to the price of a market basket of goods a weighted average of the prices of all other goods available in the market. Microeconomics can be seen as the inspect of how economic agents react to reorientate in relative prices, as living as of how relative prices are affected by the behavior of those agents. The difference and change of relative prices can also reflect the development of productivity.

Relative price factors

1.There are numerous factors affecting relative price, such(a) as the change of employee labor rate, the difference of production provide and the change of government price policy, which can impact the change of relative price among commodities.

2.Changes in market provide and demand will also make changes in relative prices, such as vary in social consumption levels and consumer consumption habits. These are all factors that impact relative prices.