A Price May Be Sticky Because

question 26

Multiple Choice

A price may be sticky because

• A) of monetary policy.
• B) of menu costs.
• C) of total factor productivity shocks.
• D) of the monetary illusion.

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Definitions:

Marginal Product

The extra output or benefit received from using one more unit of a variable input.

Average Variable Cost

The total variable costs of production divided by the quantity of output produced; it varies with the level of output.

Average-Variable-Cost Curve

A graphical representation showing how average variable costs of production vary with the level of output, typically U-shaped due to economies and diseconomies of scale.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the number of units produced, indicating the average cost of producing each unit.