1. What Is Relative Price?

Relative price is the ratio of the price of one good or service to the price of another. It indicates how much of one item can be exchanged for another and helps in comparing the value between different products or services.

2. How Does The Calculator Work?

The calculator uses the relative price formula:

Where:

• \( \text{Price A} \) — Price of the first item in currency
• \( \text{Price B} \) — Price of the second item in currency

Explanation: The formula calculates how many units of Price B are equivalent to one unit of Price A, providing a clear comparison between the two prices.

3. Importance Of Relative Price Calculation

Details: Calculating relative price is essential for economic analysis, budgeting, purchasing decisions, and understanding market trends. It helps consumers and businesses make informed choices by comparing the cost-effectiveness of different options.

4. Using The Calculator

Tips: Enter both prices in the same currency unit. Ensure Price B is greater than zero to avoid division by zero errors. The result will be a dimensionless ratio.

5. Frequently Asked Questions (FAQ)

Q1: What does a relative price of 1.5 mean?
A: A relative price of 1.5 means that Price A is 1.5 times the price of Price B, indicating that Price A is more expensive relative to Price B.

Q2: Can I use different currencies for Price A and Price B?
A: No, both prices should be in the same currency for accurate comparison. Convert both prices to a common currency before calculation if necessary.

Q3: How is relative price used in economics?
A: In economics, relative price helps determine opportunity cost, influence consumer behavior, and analyze supply and demand dynamics in markets.

Q4: What if Price B is zero?
A: Division by zero is undefined. Price B must be greater than zero for the calculation to be valid.

Q5: Can relative price be less than 1?
A: Yes, if Price A is less than Price B, the relative price will be less than 1, indicating that Price A is cheaper relative to Price B.