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.

---

Definitions:

Leisure

Time available for ease and relaxation where no work is done.

Consumption Goods

Goods that are intended and consumed by individuals or households to satisfy their immediate wants and needs.

Perfect Complements

Goods that are often used together in fixed proportions, where the utility of one item increases with the usage of the other.

Wage Rate

The amount of money paid to an employee per unit of time, often per hour or day.