Price Rigidity

question 63

Multiple Choice

Price rigidity:

• A) refers to the inability for firms to change price because of consumer reaction.
• B) is usually an indication of collusive agreements in an industry.
• C) is the tendency for all firms in an industry to charge approximately the same price for a specific product over long periods of time.
• D) is the tendency for all firms in an industry to charge approximately the same price for a specific product over a short period of time even though prices may vary widely over long periods of time.
• E) is almost never an indication of collusive agreements in an industry.

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Definitions:

Cost Method

An accounting approach used to measure the value of an investment, based on the cost to acquire it, minus any impairments.

Unamortized Acquisitional Fair Value Adjustments

The portion of the adjustments to the fair values of acquired assets and liabilities through an acquisition that has yet to be amortized over their useful life.

Unrealized Profit

Profit that has been generated on paper from investments but not yet realized through a sale or transaction.

Upstream Sales

Transactions involving the sale of goods or services from a subsidiary to a parent company, often seen in vertical integration scenarios.