Some Economists Suggest That Because of the Costs of Negotiating

question 38

Multiple Choice

Some economists suggest that because of the costs of negotiating contracts, printing price lists, etc., it is costly for firms to change prices in response to demand changes. This hypothesis is known as the

• A)sticky wage theory.
• B)menu cost theory.
• C)Phillips theory.
• D)Friedman theory.

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Definitions:

Pioneer Products

The first offerings brought to the market in a specific category, often opening new consumer demand or creating a new industry.

Consumer Preferences

The subjective tastes and likes that dictate the choices made by consumers regarding products or services.

Early Adopters

Individuals or businesses who start using a new product, service, or technology soon after it is launched, before the majority of the population does.

Laggards

Consumers who like to avoid change and rely on traditional products until they are no longer available.