When the Actual Change in the Price Level Differs from Its

question 95

Multiple Choice

When the actual change in the price level differs from its expected change,which of the following can explain why firms might change their production?

• A)both menu costs and mistaking a price level change for a change in relative prices
• B)menu costs but not mistaking a price level change for a change in relative prices
• C)mistaking a price level change for a change in relative price but not menu costs
• D)neither menu costs nor mistaking a price level change for a change in relative prices

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Definitions:

Business Products

Goods and services that are purchased or leased for the main purpose of using them in the operation of a business rather than for personal use or consumption.

Support Products

Support products are ancillary items or services that support or enhance the usability and performance of a primary product or service.

Components

Fundamental parts or elements that make up a whole system, machine, or device, each serving a specific function.

Derived Demand

A demand for a good or service that arises from the demand for another good or service.