Firms That Face Menu Costs React to a Sustained Increase

question 30

Multiple Choice

Firms that face menu costs react to a sustained increase in demand by:

• A) increasing output and then raising the price at which they are willing to sell their output.
• B) charging higher prices, without necessarily increasing the amount of output they are willing to sell.
• C) charging lower prices, while simultaneously increasing the amount of output they are willing to sell.
• D) increasing output and then reducing the price at which they are willing to sell their output.