Prices of inputs tend to be sticky in the short run because of informal and formal price arrangements between the buyer and seller of inputs.

Question

Quizplus · Accepted Answer

Informal and formal agreements between buyers and sellers of inputs can make prices sticky in the short run, as established prices are difficult to adjust quickly based on changes in market conditions. This can create a lag in response to changes in demand or supply, leading to a temporary imbalance in the market.

Prices of Inputs Tend to Be Sticky in the Short