The Theory That Firms Will Be Slow to Change Their

question 49

Multiple Choice

The theory that firms will be slow to change their products' prices in response to changes in demand because there are costs to changing prices is called

• A)transactions cost theory.
• B)cost-benefit theory.
• C)menu cost theory.
• D)gift exchange theory.

Grasp the significance of employee involvement in decision-making processes and its influence on motivation according to motivational theories.

Understand the principles behind behavior modification theories and their criticisms.

Identify strategies for overcoming boredom and enhancing employee motivation through job design.

Understand the concept of equity theory and its implications for workplace fairness and motivation.

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Definitions:

Zero Economic Profit

Occurs when a firm's total revenues are exactly equal to its total costs, including both explicit and implicit costs, indicating no abnormal profit above the normal rate of return.

Continue to Produce

The decision by a business to maintain production activities, often evaluated in the context of profitability and market demand.

MR = MC

The economic principle where marginal revenue equals marginal cost; it is optimal for firms pursuing profit maximization.

Long-Run Equilibrium

A state in which all factors of production and costs are variable, and firms make normal profits in a competitive market.