If the relative price of one unit of good Y is 0.25 units of good Z, then it follows that the absolute price of good Z can be __________ and the absolute price of good Y can be __________.
A)$4,000; $2,000
B)$1,000; $2,000
C)$2,000; $1,000
D)$1,000; $250

Question

Quizplus · Accepted Answer

If the relative price of one unit of good Y is 0.25 units of good Z, we can set the price of one unit of good Z to be $1,000. Then, the price of one unit of good Y would be $250 (0.25 x $1,000). Therefore, option D is the only choice that satisfies these conditions.

If the Relative Price of One Unit of Good Y