A relative cost is the cost of a thing or service relative to another, or the comparison of two costs. The ratio between the prices of any two items or the ratio.
between the price of one good and the price of a market basket of goods can be used to represent a relative cost. (a weighted average of the prices of all other available in the market). The study of how economic agents respond to changes in relative prices and how that behavior affects relative cost is known as microeconomics. The variation and shift in relative prices may also be a reflection of productivity growth .Displaystyle P is the relative price of the good or service rather than the nominal price in the demand equation displaystyle Q=f(P)displaystyle
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