Suppose over the last year that the price of iron ore increased from $1,200 a ton to $1,275 a ton.Over the same time a measure of the overall price level increased from 150 to 156.The price of iron ore increased by
A)less than inflation,so it became less scarce.
B)less than inflation,so it became more scarce.
C)more than inflation,so it became more scarce.
D)more than inflation,so it became less scarce.

Question

Quizplus · Accepted Answer

The price of iron ore increased by 6.25% (from $1,200 to $1,275), while the overall price level increased by 4% (from 150 to 156). Since the price of iron ore increased more than inflation, it became more scarce.

Suppose Over the Last Year That the Price of Iron