Prices tend to be sticky because:
A) firms are worried that frequent price changes would annoy consumers.
B) most firms have agreements with each other to fix prices at profit-maximizing levels.
C) government controls most prices.
D) foreign competition discourages domestic firms from price changes.

Question

Quizplus · Accepted Answer

Prices tend to be sticky because of concerns that frequent price changes would annoy consumers. Consumers may be confused or frustrated if they see the price of a good or service fluctuating frequently, and they may lose trust in the company as a result. To avoid this, many firms try to maintain relatively stable prices over time, even if it means sacrificing short-term profits.

Prices Tend to Be Sticky Because