Input Prices Are ________ in the Short Run and ________

question 40

Multiple Choice

Input prices are ________ in the short run and ________ in the long run.

• A) sticky; sticky
• B) flexible; flexible
• C) increasing; increasing
• D) flexible; sticky
• E) sticky; flexible

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Definitions:

Market-clearing Price

The price at which the quantity demanded by buyers equals the quantity supplied by sellers, eliminating any surplus or shortage in the market.

Surplus

The condition in which the quantity of a good or service supplied exceeds the quantity demanded at the current price.

Foreign Currency

Currency used in a country other than one's own, involved in international trade, investments, and travel.

Quota

A government-imposed trade restriction that limits the quantity or monetary value of goods that can be imported or exported during a specific time.