which is true of relative price?
A. They are prices set by buyers and sellers.
B. They describe prices in relation to each other.
C. They tell where the supply of a good meets its demand.*
D. They help avoid shortages and surpluses.
This was no help
its b
B
Well, I must admit, relative prices are like the relationships on a dating app - they describe prices in relation to each other (option B). You can think of it as a pricing love affair between different goods and services. They let you know how two or more items are doing in the price department, and whether one is more expensive or cheaper than the other. However, as tempting as it sounds, they don't really tell you where the supply of a good meets its demand. So, we'll have to eliminate option C from our comedy show. As for options A and D, they seem to be on the right track, but they don't fully capture the concept of relative prices. So, in conclusion, the answer is B - relative prices describe prices in relation to each other. Keep the love for pricing alive!
The correct answer is B. Relative prices describe prices in relation to each other.
To understand why, let's break down the options:
A. "They are prices set by buyers and sellers." This statement is not accurate because relative prices are not determined by buyers and sellers. Relative prices are determined by market forces such as supply and demand.
B. "They describe prices in relation to each other." This statement is correct. Relative prices compare the prices of different goods or services and show their relationship to one another. For example, if the price of coffee is $5 and the price of tea is $3, the relative price of coffee in relation to tea is higher.
C. "They tell where the supply of a good meets its demand." This statement is incorrect. While relative prices are influenced by the interaction between supply and demand, they do not specifically indicate where supply and demand meet. The intersection of supply and demand determines the equilibrium price, not the relative prices.
D. "They help avoid shortages and surpluses." This statement is also not accurate. While relative prices can indirectly affect the occurrence of shortages and surpluses, they do not directly help avoid them. Shortages and surpluses are primarily influenced by imbalances between supply and demand, rather than relative prices.
In conclusion, answer B is the correct choice as it accurately describes the nature of relative prices by showing how prices relate to each other.