Relative Price

Relative Price

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Description

Please note that the content of this book primarily consists of articles available from Wikipedia or other free sources online. In the demand equation Q = f(P) (in which Q is the number of units of a good or service demanded), P is the relative price of the good or service rather than the nominal price. It is the change in a relative price that prompts a change in demand. For example, if all prices rise by 10% there is no change in any relative prices, so if consumers' nominal income and wealth also go up by 10% leaving real income and real wealth unchanged, then demand for each good or service will be unaffected. But if the price of a particular good goes up by, say, 2% while the prices of the other goods and services go down enough that the overall price level is unchanged, then the relative price of the particular good has increased, and unless the good is a Giffen good the demand for it will go down.show more

Product details

  • Paperback | 60 pages
  • 152 x 229 x 4mm | 100g
  • Spellpress
  • United States
  • English
  • black & white illustrations
  • 6136253976
  • 9786136253978