When Prices Are Fixed for a Period of Time,such as with Long-Term

question 46

Multiple Choice

When prices are fixed for a period of time,such as with long-term contracts that fix wages,then

• A)the government needs to intervene to adjust prices.
• B)prices adjust,but not quickly enough to avoid shortages or surpluses.
• C)prices do not adjust to changes in market conditions.
• D)prices adjust instantly.
• E)None of the above.

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Definitions:

Price Takers

Firms or individuals in a market who accept the prevailing prices as they cannot influence them due to their small market share in highly competitive markets.

Identical Products

Products that are the same in every aspect, often referred to in economics to describe goods that have no differentiation in the eyes of consumers.

ATC

ATC can refer to Air Traffic Control, a service provided to ensure the safe, orderly, and expeditious flow of air traffic in the sky and at airports.

MC

MC stands for Marginal Cost, which is the cost of producing one additional unit of a good or service.