Which of the Following Best Explains Why Prices Tend to Be

question 239

Multiple Choice

Which of the following best explains why prices tend to be inflexible even when demand changes?

• A) Government regulations limit the number of times a firm can change prices in a year.
• B) In most industries the profit-maximizing price does not change even when demand changes.
• C) Production costs do not tend to change when a firm varies its level of output.
• D) Firms may be reluctant to change prices for fear of setting off a price war or losing customers to rivals.

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