Which of the Following Statements About Price Wars Is True

question 46

Multiple Choice

Which of the following statements about price wars is true?

• A) Firms that have to deal with the possibility of price wars often have extremely flexible prices.
• B) Firms that do not have to deal with the possibility of price wars often have sticky prices.
• C) Price wars tend to increase the short-run flexibility of prices.
• D) Firms that have to deal with the possibility of price wars often have sticky prices.

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Definitions:

Approximately Unit Elastic

A situation in economics where the percentage change in quantity demanded is roughly equal to the percentage change in price, indicating an elasticity of demand close to one.

Teenagers

Individuals who are in their teenage years, typically between the ages of 13 and 19.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the sensitivity of consumers to price changes.

Gasoline Consumption

The total volume of gasoline used by vehicles within a country or region, often measured in gallons or liters per capita.