Explain the Difference Between an Increase in Average Price Level

question 41

Essay

Explain the difference between an increase in average price level and an increase in relative prices in economic evaluation of engineering projects.

---

Definitions:

Game Theory

A branch of economics and mathematics that studies strategic interactions among rational decision-makers.

Strategic Situations

Scenarios in which individuals or organizations must make decisions that consider the actions and reactions of other participants.

Price-Fixing

An illegal agreement among competitors to set prices at a certain level, rather than allowing them to be determined naturally by market forces.

Cartels

An agreement among competing firms to control prices or exclude entry of a new competitor in the market, often illegal and against free market principles.