According to the Sticky-Price Theory, Which Statement Is Consistent with an Unexpected

question 59

Multiple Choice

According to the sticky-price theory, which statement is consistent with an unexpected fall in the price level?

• A) Some firms' prices are lower than desired, which increases their sales.
• B) Some firms' prices are lower than desired, which depresses their sales.
• C) Some firms' prices are higher than desired, which increases their sales.
• D) Some firms' prices are higher than desired, which depresses their sales.

---

Definitions:

Equivalent Units

A concept used in process costing that converts partially completed goods into a number of fully completed units for accounting purposes.

Direct Materials

Raw materials that can be directly traced to the production of goods and are a significant part of the finished product.

Conversion Costs

Expenses in manufacturing that include both labor costs and overhead costs associated with converting raw materials into finished goods.

Equivalent Units

A method used in process costing that converts partially completed units into a smaller number of fully completed units.