Firms Do Not Change Prices Frequently Because

question 118

Multiple Choice

Firms do not change prices frequently because:

• A)there are legal prohibitions against doing so.
• B)it is easier to change the quantity of capital used in production.
• C)it is costly to do so.
• D)customers will refuse to patronize firms that change prices frequently.

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Definitions:

Homeostasis

The regulatory process by which biological systems tend to maintain stability while adjusting to conditions that are optimal for survival.

Overjustification Effect

The phenomenon where providing excessive external rewards for an already internally rewarding activity leads to a decrease in intrinsic motivation.

Overjustification Effect

The phenomenon in which rewarding a person for performing an activity actually decreases their intrinsic motivation to perform that activity.

Externality Hypothesis

A theory suggesting that individuals attribute their success to internal factors and failures to external factors, often explored within the context of social psychology and self-perception.