Firms That Face Menu Costs React to a Sustained Increase

question 30

Multiple Choice

Firms that face menu costs react to a sustained increase in demand by:

• A)increasing output and then raising the price of their output.
• B)charging higher prices, without necessarily increasing the amount of output they are willing to sell.
• C)charging lower prices, while simultaneously increasing the amount of output they are willing to sell.
• D)increasing output and then reducing the price of their output.

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Definitions:

Unemployment

The situation of being without a job, despite being willing and able to work, typically measured as a percentage of the labor force.

Health Risk

The probability of experiencing harm or adverse effects on health as a result of exposure to a hazard.

Internal Locus

The belief that one has control over their life and outcomes, as opposed to external forces having that control.

Luck

The experience of notably positive, negative, or improbable events that are not attributable to one's own actions and are considered to be influenced by chance.