A One-Factor Economy a Relative prices and supply The particular amounts of each goods produced are determined by prices The relative price of goods X(cheese) in terms of goods Y (wine) is the amount of goods y(wine) that can be exchanged for one unit of goods X(cheese) Examples of relative prices If a price of a can of Coke is $0. 5, then the relative price of Coke is the amount of s that can be exchanged for one unit of Coke which is 0.5 The relative price of a S in terms of Coke is 2 cans of Coke per dollar Copyright C 2003 Pearson Education, Inc Slide 1-14Copyright © 2003 Pearson Education, Inc. Slide 1-14 ▪ Relative Prices and Supply • The particular amounts of each goods produced are determined by prices. • The relative price of goods X (cheese) in terms of goods Y (wine) is the amount of goods Y (wine) that can be exchanged for one unit of goods X (cheese). • Examples of relative prices: – If a price of a can of Coke is $0.5, then the relative price of Coke is the amount of $ that can be exchanged for one unit of Coke, which is 0.5. – The relative price of a $ in terms of Coke is 2 cans of Coke per dollar. A One-Factor Economy