Suppose there are only two goods: guns and roses.In Los Angeles,the absolute price of roses is 50 dollars per dozen.If the relative price of roses in terms of guns is 1 guns per dozen roses,then the absolute price of guns is

Question

Quizplus · Accepted Answer

We can use the concept of relative prices to determine the absolute price of guns. If the relative price of roses in terms of guns is 1 gun per dozen roses, then one dozen roses can be traded for one gun. The absolute price of roses is given as 50 dollars per dozen, so one gun must also be worth 50 dollars. Therefore, the absolute price of guns is 50 dollars per gun, which is answer choice C.

Suppose There Are Only Two Goods: Guns and Roses