I have discussed something about price and relative price in another forum. The questions are :
Is price always relative in Economics ??? and
Does relative price exist when there is only one good ?
My answer is shown below. Would you mind showing me your viewpoint about that ? Many thanks.
Price is an exchange ratio between goods. A ratio implies that an amount is compared to another, and “compared to” here exactly means “relative to”. A ratio accordingly must contain the meaning of “relative”. Price is a ratio, and for this reason it also contains the meaning of “relative”. Price therefore is always relative.
Exchange is an activity of human being, and in such a case, no human being, no exhange. Human being cannot exist when there is only one good. For example, we need both air and food. In other words, if there is only one good, there will be no exchange and thus no price or relative price also.
If you are asking “Is price a universal relative constant” like time, then no, price does not exist is there is no human around to pay it. Price does not necessarily have to be measured in human terms if you consider the expenditure of energy for necessities.
The concept of utility which creates demand (and thereby a need for price) is not uniquely human. Animals are hungry, horny and territorial and therefore must exchange something of value (risk, energy, etc) to acquire physical demand items.
Finally, price can exist in a world where there are no goods or only one good (notwithstanding that humans could not). Price is relative for all products, not merely goods but services too.
Say were were drifting naked in a balloon in outer space. There is only one product - oxygen. I have an itchy back and you feel insecure about how you look in the buff. We agree to exchange a scratch for a compliment. No! Wait, I want two scratches if I am going to have to lie.
