The Relative Price of a Good

question 77

Multiple Choice

The relative price of a good

• A)is always measured in current dollars.
• B)is a measure of the relative share of the consumer's income devoted to its purchase.
• C)is its price in terms of money.
• D)is equal to the average price of the good over the last 5 years.
• E)reflects its price in terms of units of other goods.

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Definitions:

Average Expenditure

The total amount spent on a specific good or service divided by the quantity purchased, indicating the average amount an individual pays for a unit of that good or service.

Extra Unit

Refers to an additional unit of production or service, considering marginal costs or benefits associated with producing or consuming one more unit.

Monopsonistic Factor Market

A market structure where there is only one buyer for a particular factor of production, leading to monopsony power.

Efficient Level

An optimal state of allocation of resources where any changes might lead to a decrease in efficiency or utility.