The price of one good divided by the price of another good is a
A) money price.
B) relative price.
C) budget constraint.
D) divisible good.

Question

Quizplus · Accepted Answer

The price of one good divided by the price of another good is a relative price, as it shows the price ratio between two goods. This allows one to compare the prices of the two goods relative to each other, and make decisions about which one to purchase based on their relative prices. Money price refers to the actual amount of money a good costs, while budget constraint refers to the combination of prices and income that limit a consumer's purchasing power. Divisible good refers to a good that can be divided into smaller units for consumption.

The Price of One Good Divided by the Price of Another