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Relative price

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Relative price is the price of a commodity such as a good or service in terms of another; ie, the ratio of two prices. A relative price may be expressed in terms of a ratio between any two prices or the ratio between the price of one particular good and a weighted average of all other goods available in the market. A relative price is an opportunity cost. Microeconomics can be seen as the study of how economic agents react to changes in relative prices.

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