Relative price意思

"Relative price" refers to the price of a good or service in relation to the prices of other goods or services. It is the price of a good or service expressed in terms of the prices of other goods or services, rather than in terms of a fixed currency unit.

For example, if a loaf of bread costs $3 and a gallon of milk costs $4, the relative price of bread in terms of milk is 3/4, or 0.75. This means that for every gallon of milk, you can buy 0.75 loaves of bread.

Relative prices are important in economics because they help to determine how resources are allocated and how consumers make decisions. For example, if the relative price of bread increases, consumers may buy less bread and more milk, while producers may shift resources from the production of bread to the production of milk.