Prices May Be Sticky in the Short Run Because

question 10

Multiple Choice

Prices may be sticky in the short run because

• A) consumers are irrational and do not react fast enough.
• B) firms are set in their ways of conducting business.
• C) its too costly for firms to change prices.
• D) government regulated money prices.
• E) there is no upward pressure on prices in the market.

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Definitions:

Primacy Effect

A cognitive bias that results in a person recalling items or information presented at the beginning of a list better than those in the middle or end.

Low-ball Technique

A persuasion tactic in which an initially favorable deal is later altered to become less favorable to the individual who agreed to it.

Foot-in-the-door Technique

A persuasion strategy in which agreement to a small, initial request increases the likelihood of compliance with a larger, later request.

Door-in-the-face Technique

A persuasion strategy where a large, unreasonable request is made first and, if refused, a smaller, more reasonable request is made.