Question

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. A and c

Answer 1

Answer: None of the above

Step-by-step explanation: f the relative price of one unit of good y is 0.25 units of good z, it means that

`P_(y) = 0.25 * P_(z)`

Out of the given options none satisfy this condition, for

a.
`P_(y) = 0.25 * P_(z)`

`image`

b.
`P_(y) = 0.25 * P_(z)`

`image`

c.
`P_(y) = 0.25 * P_(z)`

`image`

Therefore, none of the above options satisfy the relative price equation.