Which of the Following Statements Concerning Price Rigidity Is True

question 102

Multiple Choice

Which of the following statements concerning price rigidity is true?

• A) Since the economy experiences continued inflation prices are not rigid.
• B) Prices will be rigid when there is unanticipated monetary policy but not when there is anticipated monetary policy.
• C) Data has clearly demonstrated that the long run aggregate supply curve is horizontal.
• D) When there are demand changes, firms will not change their price because of the costs associated with renegotiating contracts and informing customers of price changes.

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Definitions:

ATC

Average Total Cost, which is the sum of all production costs divided by the quantity of output produced, incorporating both fixed and variable costs.

Agricultural Products

Goods derived from farming and agriculture, including crops and livestock.

Monopolist

An individual or company that holds exclusive control over the supply or trade of a particular good or service, allowing them to influence prices and market conditions.

Short-Run

The short-run in economics refers to a period during which at least one input, such as plant size, is fixed and cannot be changed.