If the price of Nike⁽ᵗᵐ⁾ running shoes increased from $100 to $120, and the price of comparable New Balance⁽ᵗᵐ⁾ shoes increased from $100 to $130, how have the prices changed?
A) The nominal prices of both shoes have decreased, and the relative price of the Nike shoes has fallen.
B) The nominal prices of both shoes have decreased, and the relative price of the Nike shoes has risen.
C) The nominal prices of both shoes have increased, and the relative price of the Nike shoes has fallen.
D) The nominal prices of both shoes have increased, and the relative price of the Nike shoes has risen.

Question

Quizplus · Accepted Answer

The nominal prices of both Nike and New Balance shoes have increased, indicating a rise in their market prices without adjusting for inflation. The relative price of Nike shoes compared to New Balance shoes has fallen because the price increase for Nike is smaller (from $100 to $120) compared to the increase for New Balance (from $100 to $130), making Nike shoes relatively cheaper.

If the Price of Nike⁽ᵗᵐ⁾ Running Shoes Increased from $100