The dollar price of a good relative to the average dollar price of all other goods is the
A)market price
B)equilibrium price
C)nominal price
D)real price

Question

Quizplus · Accepted Answer

The dollar price of a good relative to the average dollar price of all other goods is known as the real price. The real price is a measure of the purchasing power of a consumer's income and it reflects the amount of other goods that can be purchased with the same amount of money. The market price is the price at which a good is bought and sold in a specific market, while the equilibrium price is the price at which the quantity of a good demanded equals the quantity supplied. Nominal price is the price of a good in current dollars, without any adjustment for inflation. None of these terms accurately describe the definition given in the question. Therefore, the best choice is D - real price.

The Dollar Price of a Good Relative to the Average