Which of the Following Statements About Price Stickiness or flExibility

question 49

Multiple Choice

Which of the following statements about price stickiness or flexibility is true?

• A) Prices of many raw materials are less flexible than the prices of final goods and services.
• B) Prices of many raw materials are much more flexible than the prices of final goods and services.
• C) Prices of many raw materials are about as flexible as the prices of final goods and services.
• D) Prices of many raw materials are only slightly more flexible than the prices of final goods and services.

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Definitions:

Excess Supply

A situation where the quantity of a product offered for sale by producers is greater than the quantity demanded by consumers at a given price.

Equilibrium Price

The price at which the quantity demanded by consumers equals the quantity supplied by producers, resulting in market balance.

Government

The organization or system through which a community, state, or nation is governed and regulated.

Nonprice Rationing

Nonprice rationing is the allocation of goods or services using means other than price, such as waiting times or ration coupons, especially when there are shortages.