Changes in the relative prices of two goods indicate
A)Inflation.
B)Nominal price changes adjusted for the inflation in the price of the goods.
C)That average prices for the period must not be stable.
D)Changes in the desired mix of output.

Question

Quizplus · Accepted Answer

Changes in the relative prices of two goods indicate that there has been a shift in the desired mix of output. This means that consumers or producers are shifting their preferences towards one good over the other, leading to a change in their relative prices. It may also indicate changes in production costs or availability of resources for each good.

Changes in the Relative Prices of Two Goods Indicate