If all prices, including the price of beef, increase by 3%, then the relative price of beef has and there inflation. a. remained constant, is no b. remained constant; is c. increased; is d. increased; is no

Question

Business

Enzo

18 June, 17:15

If all prices, including the price of beef, increase by 3%, then the relative price of beef has and there inflation. a. remained constant, is no b. remained constant; is c. increased; is d. increased; is no

+5

Answers (1)

Know the Answer?

Jovany Collins · Answer 1

If all prices, including the price of beef, increase by 3%, then the relative price of beef has remained constant and there is inflation.

Option B

Explanation:

Relative price of beef = price of beef / price of some other good.

As both beef and other commodities rise by the same amount, the relative price remains steady.

Because all prices have risen by 3%, inflation is there.

The relative price is the sum of another commodity that can be substituted for a given quantity. Assume we've got two A and B consumer.

There was a misunderstanding. Absolute goods prices may sometimes adjust, but relative prices may remain stable.