The Fact That Some Resource Prices Are Fixed by Contracts

question 52

Multiple Choice

The fact that some resource prices are fixed by contracts help explain why firms:

• A)increase output in the short run when the price level increases.
• B)keep production levels constant in the short run when the price level decreases.
• C)sell output in the short run at fixed prices.
• D)increase output in the long run when the price level increases.
• E)decrease production when nominal wages fall in the long run.

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Definitions:

Foramen

A natural opening or passage, especially in a bone, through which blood vessels, nerves, or ligaments may pass.

Fissure

A small tear in the lining of an organ, such as the skin or the lining of the anus.

Sinus

Cavities or air spaces within the bones of the skull and face that are connected to the nasal cavities, playing roles in respiration and the production of mucus.

Tubercle

A small rounded projection or nodule, especially one that is part of the structure of a bone.