1. What is a Relative Price Calculator?

Definition: This calculator determines the relative price (RP) which compares a new price to an old price.

Purpose: It helps economists, businesses, and consumers understand price changes over time or between different products.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( RP \) — Relative price (dimensionless)
• \( P_{new} \) — New price (currency, e.g., USD)
• \( P_{old} \) — Old price (currency, e.g., USD)

Explanation: The new price is divided by the old price to determine how prices have changed relative to each other.

3. Importance of Relative Price Calculation

Details: Relative prices help analyze inflation, compare product values, and make purchasing decisions.

4. Using the Calculator

Tips: Enter both the new and old prices in the same currency. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What does a relative price of 1.5 mean?
A: It means the new price is 1.5 times (or 50% higher than) the old price.

Q2: Can I use different currencies?
A: No, both prices must be in the same currency for meaningful comparison.

Q3: How is this different from percentage change?
A: Relative price shows the ratio, while percentage change shows (RP-1)*100%.

Q4: What if the relative price is less than 1?
A: It means the new price is lower than the old price (e.g., 0.8 means 20% decrease).

Q5: Can I compare prices from different products?
A: Yes, this can show how the price ratio between two products has changed.