Suppose that the price of butter is $3 per pound and the price of margarine is $2 per pound. If the price of butter rises to $3.60 and the price of margarine rises to $3,then the absolute price of butter has _______________ and the relative price of butter has _______________.

Question

Quizplus · Accepted Answer

The absolute price of butter has risen from $3 to $3.60, indicating an increase in price. 
The relative price of butter has fallen because the price of margarine has increased at a faster rate compared to butter. In other words, the price of margarine has become relatively more expensive than butter, making butter the cheaper option relatively.

Suppose That the Price of Butter Is $3 Per Pound