If Firms Set Prices and Then Keep Them Fixed for a Period

question 73

Multiple Choice

If firms set prices and then keep them fixed for a period of time, their fixed prices imply that

• A) prices are set by aggregate demand and supply.
• B) the aggregate price level is fixed and that aggregate supply determines the quantity of goods and services sold.
• C) the aggregate price level is fixed and that aggregate demand determines the quantity of goods and services sold.
• D) the aggregate price level adjusts continuously.

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Definitions:

Vertical Integration

A strategy where a company expands its business operations into different steps on the same production path, such as a manufacturer owning its supplier and/or distributor.

Upstream Suppliers

Companies or entities that provide raw materials, components, or services to another company for the production of goods.

Business Strategy

A plan of action designed to achieve a specific set of objectives that ensures the growth and success of an organization.

Extranets

Private networks that use Internet technology and the public telecommunication system to securely share part of a business's information or operations with suppliers, vendors, partners, customers, or other businesses.