Question

The prices of a commodity in the year 1975 and 1980 is 25 and 30 respectively taking 1980 as base year the price relative is:

Answer 1

Hint: Relative price of given commodity is the price of goods or services with respect to other goods or services. There is always some base value upon which we determine the relative value. Simply it is the ratio of prices of goods, which is equal to the ratio of price of one good to the price of base value of good.
Base value is the value which is taken as standard value for a number of goods. Relative price shows the relation between price of one good and the price of base good.

Complete step-by-step answer:
Given: The price of commodities in the 1975 year is 25.
The price of commodities in 1980 was 30.
It is given that 1980 year is taken as the base year and we have to determine the relative price of a commodity with a given base value.
The relative price of a given commodity is the ratio of price of commodity in 1975 year to the base year multiplied by the 100.
Relative price $ = \dfrac{{{p_n}}}{{{p_b}}} \times 100$
Here,${p_n}$ is the price of commodity in 1975 year
${p_b}$ is the price of commodity in base year
Now, substitute the values in above equation,
Relative price,
 ${l}
 = \dfrac{{25}}{{30}} \times 100\\
 = 83.33
$
So the relative price for a given commodity is 83.33 .
The correct option for the solution is (D).

Note: Students get confused when they don’t find the matching answer in a given solution and for this they might add this relative data with the 25 which gives them an answer near about the options but this method was wrong.