Microeconomics
Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 4, Problem 5WNG
To determine

The relative price.

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Assume there are only two goods (X and Y). Assume the relative price of good X, is 2 of good Y. If income doubles, the price of X doubles and the price of Y doubles, what will be the relative price of good Y?
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In 1950, a phone call at a pay phone cost 5 cents and a first-class stamp cost 3 cents. Today, those prices are 50 cents and 44 cents respectively. What has happened to the price of each good relative to the other? What has happened to the price of each good relative to all other goods?
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